As the kids are heading back to school, our thoughts turn to year-end tax planning with clients. This year, the process is a little less settled than usual because there’s still a slight chance we might see some significant changes in the Tax Code before the end of 2017, but the outlook for those changes is decidedly unclear.
Some Obstacles for Tax Reform
One of the biggest challenges to the passage of tax reform is the list of items on the legislative agenda ahead of it. Congress will return from its August recess in early September and there are 2 items that must be done before the end of September. Legislators will have to act to raise the debt ceiling in order to keep the federal government from defaulting on loans. Second, they need to agree on a budget for the next fiscal year. Both of these need to be done before the end of September, and neither is expected to be an easy pass. At this point, it seems unlikely that tax reform could be combined with either of those to move forward in September.
Another item that has come into focus recently and may take precedence over tax reform is an anticipated federal aid package for those affected by Hurricane Harvey. This action doesn’t necessarily fall into the “must be done by end of September” category, but legislators will want to move as quickly as possible to help those left suffering in the storm’s wake.
The biggest argument in favor of a tax reform package this year is the Republican focus on delivering key components of the Trump agenda. It’s way too early to talk about any proposals as a sure thing, or for that matter to consider the passage of a tax bill as a sure thing. There is so much on the Congressional calendar between now and the end of this term that it’s hard to predict the outcome.
What About Year-End Planning
As always, we encourage taxpayers to contact us early to review your activities for the year and determine if there are moves you can make before December 31 that will help to legally reduce your taxes. At this point, we are looking at year-end planning in terms of existing law, while keeping a very close eye on the tax reform debate in Washington, DC. We suggest that you do the same. Start thinking about year-end moves on the assumption that there won’t be a significant change in 2017, watch our alert service for any updates about potential significant changes, and contact your HORNE engagement team if you have any questions.
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