Make Good Decisions
Bragg Account Access
Access your investments online. Take advantage of instant access to your portfolio holdings, account activity and balances, as well as account and tax statements.
Statements & Confirmations
Download, complete and return an Electronic Notification Request, available for either Microsoft Word or Adobe Reader.
Annual Reports & Proxies
to submit a request to receive your annual reports and proxies by e-mail.
Preparing for Tax Law Changes—Actions to Consider Now
by Phillips M. Bragg, AEP®, CFP®
This information is believed to be accurate but should not be used as specific investment or tax advice. You should always consult your tax professional or other advisors before acting on the ideas presented here.
For the reader with the short attention span, here is a brief list of actions to consider taking in advance of potential changes to income tax laws in 2017 as a result of Republican control of Congress and the White House.
- If you have the option to do so, defer taxable income into next year when you may face a lower rate.
- Avoid capital gains that can be delayed into 2017.
- Avoid exercising stock options or taking deferred compensation payments that can be delayed into 2017.
- Avoid drawing more than is required from an IRA this year.
- If you have the option to do so, accelerate deductions into this year to offset current tax rates.
- Unless you are subject to the Alternative Minimum Tax (AMT), pay the final state estimated tax and pay property taxes pending now instead of delaying until the first week of 2017.
- Pay off charitable pledges to capital campaigns or "load up" your donor advised fund now.
- OR DO NOTHING if you and your accountant believe that, though change is coming, it will require compromise and lengthy negotiations and will not take effect until 2018.
What are the potential changes to the personal income tax? The various plans floated from different Republican camps giveth and taketh away. Here are some examples:
- Lower marginal tax rates—helps high earners
- Higher standard deduction—helps lower earners who have fewer itemized deductions
- Caps on itemized deductions—hurts high earners, especially charitable taxpayers
- Reform or elimination of the Alternative Minimum Tax (AMT)—restores deductions to upper-middle income taxpayers.
Of course, the various proposals must be negotiated because 60 votes are needed in the Senate. Thus, compromises may render these comments insufficient or possibly premature; the potential changes may not take effect until 2018.
The estate tax is back on the radar. Currently, estates exceeding $5,450,000 ($10,900,000 for a married couple) are subject to the estate tax. While only 0.2% of estates actually pay estate taxes, it is a highly symbolic tax for elected officials to endorse or condemn. It would be difficult to get a full repeal through the Senate where a filibuster could kill it or turn it into a temporary repeal that contains a sunset provision like the one we contended with in the first decade of this century. Additionally, a compromise could spell the introduction of a new tax or the end of the step-up in basis for some portion of estate assets.
Due to the change afoot some aggressive gift plans could be put on the shelf for a few months. Even if there is a full repeal, it is possible that the certainty of turnover in DC will prompt action instead of complacency. In short, we would expect wealth transfers to continue no matter what, though the urgency, logic, and the methods could change.
Please let us know if you would like to discuss the issues discussed here.
CNN Money: Tax cuts are coming, but maybe not as big as Trump promised
November 15, 2016
Wall Street Journal: Maximize Your Deductions Now. A Trump Presidency Means You Could Lose Them
November 18, 2016