Tax Tip of the Month

July, 2018

10 Tax Moves to Consider Now -- Don't wait until it's too late to save on your tab for 2018!

2018 brighter.

1. Defer your income. If you are self-employed, you can defer your billing so you don't get paid until the following year. This is especially worthwhile if you think you will be in a lower tax bracket next year.

2. Give gains to charity. If you itemize, making a charitable contribution could lower your taxes. Rather than giving cash, consider giving your most highly appreciated security. You will usually get a deduction equal to the full value of the security and not have to pay a capital gains tax later.

3. Max out the 401(k). If you are 50 or older, you can generally contribute up to $24,000 (adjusted for inflation) annually to this company retirement account. And contributing will lower your taxes. Though you will likely pay taxes when you withdraw the funds later in life, the hope is that your tax bracket will be lower in retirement. Never miss out on an employer match.

4. Consider a Roth conversion. You can take a portion of your pretax traditional IRA and convert it to a post-tax Roth IRA. You'll have to pay taxes when you do, but then the future growth is tax-free, under current law. This is something you should consider if your marginal tax rate now is low and likely to go up in the future, such as when you take Social Security or start the required minimum distributions after age 70½. If the tax bite is more than you thought, you can reverse the conversion next year any time before you file your taxes. Here's more on the Roth conversion and why you may want several every year.

5. Take advantage of a possible state pension tax exemption. Many states allow you to take limited amounts from your 401(k) or IRA without paying any state taxes. Here is a list by state from the National Conference of State Legislatures. You will still have to pay federal income taxes. The Roth conversions noted above generally qualify for that state exemption.

6. Make sure you've taken the annual required minimum distribution (RMD). You must begin withdrawing funds from your traditional 401(k) or IRA by the first of April following the year in which you reach age 70½. Failure to do so, or failure to withdraw enough each year afterward, results in a 50 percent penalty on the amount you should have withdrawn.

7. Sell your losers. Have some investments that haven't panned out? Consider selling and taking the tax loss. You can generally use the loss to offset gains, or take up to $3,000 loss per year ($1,500 if married filing separately), and apply it against your ordinary income. You can carry over the remainder to future years.

8. Sell your winners. Sure, this is the opposite of the previous move, but if you are in the 15 percent marginal tax bracket, your long-term capital gains are taxed at zero percent. When it comes to taxes, zero is my hero.

9. Ditch the active mutual funds. Mutual funds that buy and sell stocks frequently pass on those gains to the shareholders, even if the shareholder doesn't sell a penny of the fund itself, and those gains are taxable. Instead, consider broad index funds that rarely pass on capital gains.

10. Watch out for the alternative minimum tax (AMT). Originally targeting high-income earners, the dreaded AMT now affects many ordinary people. There is no shortcut to either seeing your tax accountant or running an estimated return on a tax program to see if you might be hit. If you are, there may be some things you can do this year to minimize its impact. Unfortunately, these could include not doing some of the items above.

There is nothing simply regarding taxes. Though these 10 tax moves could save you a bundle, be very careful. Your individual circumstances will dictate which of these strategies might work for you.

Please do not hesitate to contact us at 559-226-2209 if you have any questions or concerns about preparing your 2017 tax return. In addition, if you would like to schedule an appointment, either call us or email us at Alternatively, you can schedule an appointment by submitting an online form through our website at

Hope you find this helpful and we look forward to serving you.


Any financial or tax information contained in this article is taken from a general view and should not be acted upon in your specific circumstances without further details and analysis of the situation or professional assistance from a CPA or tax return preparer.

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