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To Start Thinking Year-End? ALTHOUGH WE'RE OFF TO A SOGGY START, SUMMERTIME HA S ARRIVED. BE T WEEN CHILDREN OUT OF SCHOOL, FAMILY VACATIONS AND MAKING PL ANS FOR FALL, THERE IS A LOT TO KEEP PEOPLE BUSY. SUMMER ALSO SIGNALS THE HALF WAY POINT OF THE YE AR, AND BY NOW, MOST PR ACTICES HAVE A DECENT FEEL FOR HOW THE YE AR IS GOING FOR THEM FINANCIALLY. WITH THIS INFORMATION IN MIND, IT IS NE VER TOO SOON TO START THINKING ABOUT YE AR£END PL ANNING. BELIE V E IT OR NOT, Congress actu- ally did us a few favors last year. Many favorable individual and business ta x incentives that were on the annual chop- ping block finally received the multiyear extension treatment they rightly deserved. What does this mean for you? In previous years, year-end planning, including the consideration for income taxes, has been a challenge due to cyclical rotation of expir- ing ta xpayer-friendly laws. Typically, unless tax advisors could take a trip in a time-traveling DeLorean to take a look at the future, it has been di‡cult to deter- mine what moves to make to avoid the "oh-no" tax bill. For the first time in many years, the Protecting Americans from Tax Hikes (PATH) Act of 2015 extended many of these laws for the foreseeable future and, in the process, added many tools to the ta x savings tool belt. For individua ls, the PATH Act permanently extended the sa les ta x deduction for ta xpayers who itemize deductions. That is, should you ma ke a la rge purcha se (a ca r or boat , for exa mple) the sa les ta x pa id on the purchase is ava ilable as a deduction on your persona l income ta x return. The PATH Act a lso ex tends the A merica n Oppor tunity credit ( perma nently) a nd the tuition and fees deduction (through 2016) for those with children in college. It a lso incentivized the choice to insta ll energ y-sav i n g equ ipment i nt o you r persona l residence with a residentia l energ y ta x credit (through 2016). As for business incentives, the PATH Act permanently increased the amount of the Section 179 expense from $25,000 to $500,000! Section 179 a l lows, for federa l income ta x purposes, the elec- tion to immediately expense 100 percent of t he a c qu i sit ion c o s t of bu si ne s s assets (such as equipment, computers a nd of f ice f ur nit ure) purcha sed a nd pla ced i nto ser v ice du r i n g t he yea r. In addition to t he ex pa nded Section 179 ex pense, the PATH Act ex tended the " bonus" depreciation provision for 2016 a nd 2017 to a llow the immediate 50±percent expensing of qua lified assets in excess of what has been ta ken under Section± 179. For 2018 a nd 2019, t his a llowable bonus depreciation expensing is reduced to 40 percent and 30 percent, respectively. O t her it em s t o rev iew du r i n g t he summer include your level of federa l income ta x withholding and estimated ta x payments. Will it be enough to avoid underpayment penalties assessed by the IRS? A re you paying too much? W hat about a ny life cha nges for this yea r? Marriages and the gift of children can sig nifica ntly cha nge your ta x picture a nd possibly prov ide other pla nning opportunities. Now is a lso the time to take a look at your current compensation including ma ximizing contributions to a retirement pla n (especia lly deduct- ible pla ns such as a Traditiona l IR A), and don't forget about your investment por tfolio. If facing la rge capita l gains ta x exposure, you can plan ahead to gift appreciated investments to charity to avoid the capita l gains ta x and receive a charitable deduction in the process. In summary, it's never too soon to start thinking about year-end planning. In addition to the items discussed in this article, there are numerous opportunities to take advantage of for both individuals and businesses. Who knows, thinking through some of these items now just may make you rest a little easier on that trip to Disney World this summer. Davis is a manager with Sol SchwartzŸ& Associates PC and has been practicing public accounting since 2008 . Davis pra ctices in var iou s area s of public accounting including tax compliance and consulting for individual, corporate, S corporation and partnership taxation. He is a member of the firm's healthcare niche that specializes in identifying and implementing solutions to achieve the goals of the physician clientele we serve. You can contact Davis at cbd@ssacpa.com or 210-384-8000, ext. 118. ■ No Way! BY CHRISTOPHER DAVIS, CPA Too Soon 2 2A C C O U N T I N G