Life happens, and so do changes in federal, state, and local laws. Wise tax planning enables you to prepare for expected events and adapt to unexpected ones. Below are a few developments that might trigger the need to look at your financial situation and consider making adjustments.

3 Reasons to Evaluate Your Tax Planning Strategy

1. Tax Code Changes

If you use your automobile for business or take deductions for medical, charitable, and moving expenses, you need to know how the federal Tax Cuts and Jobs Act (TCJA) alters and suspends such deductions for certain people. On another front, you might benefit from reviewing the temporary increases in federal exclusions for gift and estate tax amounts that are in effect until 2025. The differences may mean you should change your estate plan.

2. Retirement Account Withdrawal Deadlines

Whether you are still working or retired, when you reach 70½ years old, you must start withdrawing required minimum distributions (RMDs) from your individual retirement accounts (IRAs), unless they are Roth IRAs. Similar withdrawal rules apply to defined contributions, including 401(k) and 403(b) plans. Calculating the amounts you have to take depends on your life expectancy and that of your beneficiaries and tax return preparation. 

3. Property Transfers

When you buy, inherit, sell or give away valuable assets, including real estate, it’s an excellent time to update your estate plan. Issues such as short or long-term capital gains, designating beneficiaries or co-owners, and creating or amending trusts may be among the topics you should discuss with legal and tax planning specialists. By making estate planning adjustments, you might be able to reduce or eliminate tax liabilities, protect assets from creditors, and preserve funds for your heirs.

Potential beneficiaries or co-owners include a spouse, other family members, friends, religious or educational institutions, and charities. Your estate planning advisor will help you structure the plan to ensure any changes you make are carried out across the board, and assets are distributed according to your wishes for the beneficiaries you designate.  

Life changes and legal requirements make tax planning an ongoing process. Certified Public Accountants (CPAs) at Cloyd & Associates PSC are ready to help you meet the challenges. Located in London, KY, this firm of financial and tax professionals provides individuals and businesses throughout Laurel County with guidance in matters including tax return preparation, estate planning, and advisory services. To learn more about the range of services these skilled specialists offer, visit them online now. Call (606) 864-8110 to schedule an appointment with a member of their experienced team.