10 Tax Planning Tips

  1. Consider electing out of bonus depreciation and not electing IRC §179 to increase income for purposes of IRC 199A.
  2. Consider increasing retirement contributions to lower taxable income below the IRC 199A phaseout threshold.
  3. Consider using family partnerships and trusts to spread the Qualified Business Income between family members.
  4. Encourage clients to transfer IRA amounts to a charity rather than report the income as part of AGI and take a charitable deduction on Schedule A — especially if they are taking the standard deduction.
  5. Bunching deductions may mean more now with the increased standard deduction. Medical expenses, charitable contributions, and property taxes are particularly good candidates here.
  6. Don’t forget that interest tracing will create deductible interest if a home mortgage is taken out and the funds used for a business or investment property. Don’t forget the 10T election.
  7. Avoid making guaranteed payments to partners if the payments are equal. These payments reduce Qualified Business Income for purposes of the IRC §199A deduction.
  8. Encourage employers to use accountable plans for employee business expenses to help ease the employee’s burden of the loss of 2% miscellaneous itemized deductions.
  9. Disaster victims from the 2018 disasters should consider throwing the loss back to 2017 in order to be able to carry any unused loss back for federal purposes, as a carryback is no longer allowed in 2018.
  10. Review your choice of entity philosophy in view of the new IRC §199A deduction and lower corporate tax rates.
  11. Put the principal residence in a living trust to avoid MediCal estate recovery.

Get detailed tax planning information and a full TCJA update at the 2018/19 Federal and California Tax Update Seminar. Locations are selling out fast! Click here to check dates.