Happy New (Tax) Year!
In case you were indulging it too much egg nog and missed the news, Congress passed a new Income Tax Act effective for the 2018 tax year. While dissecting exactly what this act means to you depends in large part on your personal situation, there are some
basic themes that you may want to think about now.
Don’t Give Uncle Sam a free loan. The changes to the Federal Income Tax rules will mean predicting your 2018 income tax liability will be much more difficult than in prior years. In some but not all cases your tax liability may very well be lower
than it has been in the past. Correctly determining the proper amount of withholding and potential estimated tax payments is more important than ever this coming year. Giving Uncle Sam a large interest free loan is not a good financial plan. Your
money is always better off in your hands growing in your investment portfolio rather than sitting somewhere in Washington.
Reduce your income if you can. Although the new tax code does seem to reduce taxes, the ability to itemize and deduct certain expenses has also been reduced. For appropriate investors, municipal bonds can be an attractive way to reduce taxes on investment
income. Those still in the workforce should make sure that they are taking maximum advantage of retirement plans (401(k), IRA, SEP, ROTH, etc.) to defer taxes on current income until after retirement.
Be proactive this tax season. For many of us getting our taxes done is a chore not an opportunity. We gather up our tax information and send it to our CPA or tax advisor and wait to be told what the results are. 2018 is a rare opportunity to take stock
of where you are tax wise and make some real adjustments. Unlike past years, just tweaking your withholding or estimated payments and leaving everything else as it was is not a good tax strategy. The new Tax Act will change what you will pay in taxes
next year and making smart decisions now can help produce the best possible financial results. This is definitely the year to take some extra time and review your income and expenses with your CPA or tax advisor.
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government agency. This material has been prepared solely for informational purposes. First Merchants shall not be liable for any errors or delays in the data or information, or for any actions taken in reliance thereon. Any views or opinions
in this message are solely those of the author and do not necessarily represent those of the organization.