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If you are confused by the new tax code don’t feel badly…Your CPA may be too

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2018 ushered in a new tax regime for all the land. The only problem is the complete instruction manual did not come with it. Yesterday, I happened into a conversation with two CPAs at different times, each explaining how they are burning the midnight oil just to get a handle on how to file their clients’ returns under the new 2017 Tax Cut and Jobs Act (TCJA), effective for tax years beginning 2018. The Act giveth and taketh away for many deductions, credits and depreciation, as well as the very confusing 199A business deduction. The lesson is: this is the year to pay attention. You most likely have made certain financial decisions based on the set of rules in place over the last decade. It is now time to revisit them.

We are financial advisors here at APCM Wealth Management for Individuals and not tax advisors, but our recommendations on certain planning strategies have changed as a result of TCJA. Here is a sampling of strategies you might now consider:

  • The amount you can earn and still make an IRA or Roth contribution has gone up so check your numbers
  • Roth conversation strategies can make sense where they never did before
  • Your tax bracket is likely different, but so are the withholding rates for payroll by your employer. Be prepared for a different result on your tax bill
  • Rethink the way you give to charity, especially if you are over 70 1/2
  • 529 education savings plans now have more uses

If you are one of our clients, chances are we have already discussed appropriate strategies for your situation. If you happen to live in Fairbanks, you may want to join us as Mike Richards, CPA, of RJG CPAs and I try to make sense of it all over lunch at Raven Landing on Thursday, February 28th.

Laura Bruce, CFP®, ChFC®
Director, APCM Wealth Management for Individuals

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