Regardless of which side of the political fence you find yourself, it became evident after the last presidential election that health care and tax reform were imminent. Although several other areas have been addressed, it has now been six months under this new presidency and neither of these campaign promises has yet come to fruition. It seems that the party in power is struggling to find a health care solution that everyone can agree on. Additionally, it seems that tax reform is being delayed, in part, due to the struggle with the health care issue.
Since it is likely that some type of tax reform legislation will be passed this year, I suppose it will take some patience to learn what the powers that be come up with in the end. Unfortunately for us and all our clients, we may end up waiting until late this year to learn what tax changes will be in effect either for the current year or 2018. Odds are that any legislation passed this year will have an effective date of January 1, 2018. Keep in mind that both the health care issue and the overall tax issue will have tax consequences because the health care system currently in place does assess penalties to taxpayers if adequate coverage is not in place. Since my belief is that any tax law changes that are passed this year would take effect in 2018, we won’t be up against last minute tax legislation near year end like we were accustomed to for several years back where the changes being made were retroactive to the start of the year that they were passed. Most of these related to the tax extenders and kept us all in suspense as to which tax laws we were living under until the end of the year they applied to. That was definitely not fair and was not a great tax planning environment. It is very hard to conduct effective tax planning when we don’t learn what the tax laws will be until the year is nearly over.
We are approaching our secondary tax season where all returns that were extended in March and April must be filed before the extended due dates in September and October. On the heels of those deadlines, we will begin our year-end tax planning appointments. That is my favorite time of year as the strategy and planning done then can spawn huge tax saving dividends early next year when the tax returns are prepared.
Please contact us if you have any questions. If you have not yet provided all your 2016 information to prepare your returns, please do so now.