2019 Year-End Tax Planning Letter
Dear Clients and Friends:
With year-end approaching, we suggest possible year-end tax strategies for our clients. 2018 was the first year individuals and businesses filed tax returns reflecting major tax changes under the Tax Cuts and Jobs Act (“TCJA”). Now that we have 2018 under our belt, some of the year-end tax strategies for 2019 in light of the TCJA changes have become even clearer.
We are sending this letter not only to remind you of the time-honored, year-end tax planning techniques that survived the tax changes under TCJA, but also to stress the importance of new year-end planning strategies that TCJA provides.
Among other key changes for individuals, the TCJA reduced tax rates, suspended personal exemptions, increased the standard deduction, and revamped the rules for itemized deductions. Generally, the provisions affecting individuals went into effect in 2018, but are scheduled to “sunset” after 2025. This provides a limited window of opportunity in some cases.
The impact on businesses was just as significant. For starters, the TCJA imposed a flat 21% tax rate on corporations, doubled the maximum Section 179 “expensing” allowance, limited business interest deductions, and repealed write-offs for entertainment expenses. Unlike the changes for individuals, most of these provisions are permanent, but could be revised if Congress acts again.
The IRS continues releasing guidance on various important tax provisions (particularly on matters involving the tax changes under TCJA). However, as we complete this letter, we are still waiting for further IRS clarifications on several important provisions. We closely monitor these IRS releases on an ongoing basis. Please call HPG if you want an update on the latest IRS notifications, announcements, and guidance or if you need additional information concerning any item discussed in this letter.
For your convenience, the letter is divided into two sections:
We suggest you call HPG before implementing any tax planning technique discussed in this letter. You cannot properly evaluate a particular planning strategy without calculating your overall tax liability with and without that strategy. This letter contains ideas for federal income tax planning only. State income tax issues are not addressed.
Hughes Pittman & Gupton, LLP