Tax Planning for This Year and Beyond

Joe Kristan, a partner in the accounting firm Eide Bailly, advises high net worth clients to plan for fiscal uncertainty.


As a long-practicing tax professional in Des Moines, Joe Kristan has a keen eye focused on tax strategies for 2019. But he can multitask, and is doing so with his other eye on the national elections of 2020 and what might ensue by way of more tax code changes.

Kristan, a partner in accounting firm Eide Bailly LLP, is hedging his bet that, if Democrats win the White House next year, they will alter the income tax landscape. Some candidates already have spoken about an extra tax on super-high income earners, and any expansion of Medicare likely will result in an expansion of taxes.

“A lot of [work] for high net worth individuals is planning for uncertainty,” he says.

Estate tax deductions also could change. If and when they fall from their current level ($11.5 million), Kristan says high net worth individuals may want to revisit their charitable giving plans now in order to shed some assets that might otherwise end up in government coffers.

High net worth individuals often are that way because they own a business. It will typically be structured as a
C Corporation or an S Corporation. Though Congress dramatically cut the tax bill on C Corporations, converting to one will still leave you with an extra tax from dividend payouts. Changing your mind to reconvert to an S Corp will be difficult.

Lest we totally forget 2019 planning, here are pointers that apply for this and any other year:

  • Max out your Healthcare Savings Account contribution. That way you and your spouse can shield up to $7,000 ($8,000 if over 55) of income earmarked for it, and there is no salary cap to participate.
  • If you’re mulling whether to sell a mutual fund, do so before it makes its year-end dividend and capital gains distributions (typically in December; it varies by company). Otherwise, you’ll be taxed on them. (Conversely, if you’re buying, wait until at least a day after those tax events occur.)
  • On the securities side of investing, stack up any money losers for the year against what you have made profits on. If you have already banked some trading profits, you can offset them by selling some losers before the end of the year.
  • If you have to take a Required Minimum Distribution from your IRA, but don’t need the money, consider donating it directly to a charity. That will satisfy your RMD requirement, cut your tax bill and cement your reputation as a decent human being.

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