Making Cents: Time To Plan For Your 2017 Tax Return

US Wealth Napolitano |

By: John P. Napolitano, CFP®, CPA, PFS, MST

Each year many Americans file their tax returns wondering if there was anything that they may have done differently to trim their tax bill. Unfortunately by the time you are filing, your options are limited.  The best time to take a critical look at what you’d like your tax return to look like is now, while there is still time left in the year to alter your tactics to obtain an optimal result.

At this point in time, it doesn’t look like there will be major tax changes enacted for the current tax year.  Of course, stay tuned because anything can happen. But absent major changes, do your 2017 tax planning using the tax laws currently in effect without speculation about what you may hope for tax changes.

Start this exercise by using last year’s return and go down the return line by line. Then use your best estimate regarding what you believe the current year will look like and begin to go through the exercise of what you may do differently in any particular area. The tax code is complex, so if your situation makes the complex tax code even more complicated, seek professional guidance from more than a tax preparer.

For example, if you are retired and your income is fairly low with a little side job or consulting income, the knee jerk reaction of your CPA is going to suggest that you establish a retirement contribution to save current years taxation. Perhaps a better holistic solution would be for that CPA to consider that your current income tax bracket may be low, and that it is possible that your tax bracket may actually increase when you get to required minimum distribution age 70 ½. A Roth IRA may be another solution even though you’d get no deduction today while in a low tax bracket and never have to deal with required minimum distributions.

If, on the other hand, your retirement income is very high and you are buried in the top tax bracket, you may be advised to set up a defined benefit type of retirement plan for your consulting income. This will give you a rather substantial tax deduction in the current year. This type of retirement account has limitations and costs to set up, but in the right situation for a retiree with substantial consulting income it may be ideal.

Pay attention to the tax consequences of your savings and investments. Understand where your taxable income is originating and then ask if it is being managed in the most tax efficient manner. While it may be difficult this early in the year to know where you will stand with gains, losses and distributions, use your best estimate and consider making some pro-active moves. You can be pro-active with using up any loss carryforwards, loss harvesting from poorly performing investments or creating capital gains by trimming some winners because you are in the lowest tax bracket and will pay zero in capital gains taxes.


John P. Napolitano CFP®, CPA is CEO of U. S. Wealth Management in Braintree, MA.  Visit JohnPNapolitano on LinkedIn or The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor. US Wealth Management, US Financial Advisors and LPL Financial do not offer tax advice. John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and US Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200.