As you consider making any final year-end tax planning moves, review the major changes that are now in effect.

December 31, 2018

As you continue with your 2018 year-end tax planning, refresh your knowledge of the tax changes that are now in effect. Given the complexity, it’s smart to consult with your tax, financial and legal professionals to ensure you’re managing your wealth in the most tax-efficient way possible. Start the conversation with these topics and go from there.

Finding Your New Bracket

There are still seven brackets for 2018; the highest is now 37% instead of 39.6%. Where do you fall?

Income tax brackets have shifted. The act eliminates the so-called marriage penalty in all but the highest brackets and removes much of the disadvantage of the married-filing-separate status.

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Asset allocation and diversification do not guarantee a profit nor protect against a loss. While interest on municipal bonds is generally exempt from federal income tax, it may be subject to the federal alternative minimum tax, state or local taxes. In addition, certain municipal bonds (such as Build America Bonds) are issued without a federal tax exemption, which subjects the related interest income to federal income tax. Rolling from a traditional IRA into a Roth IRA may involve additional taxation. When converted to a Roth, the client pays federal income taxes on the converted amount, but no further taxes in the future. Unless certain criteria are met, Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted. Additionally, each converted amount is subject to its own five-year holding period. Investors should consult a tax advisor before deciding to do a conversion. Sources: Raymond James “Tax planning: Income and retirement” white paper; forbes.com, irs.gov