Tips for Year-End Planning

Year-End Planning Tips: By the Numbers. The closing quarter of the year is a great time to review your overall financial and estate plan, align your investment portfolio with your goals, and take timely action before the end of the year. Here, we look at some key numbers and offer a few tax considerations you may want to discuss with your relationship manager and tax professional. 3.8%: The surtax on unearned net investment income that is applied to individuals, trusts, and estates with income above specific thresholds. Tip: Because tax-free Roth IRA distributions are not considered investment income or part of your modified adjusted gross income (MAGI), converting a traditional IRA to a Roth IRA may reduce your exposure to this surtax in future years. $14,000: Total amount you can gift per year per person without paying a gift tax or reducing your $5.49 million estate tax exclusion. Tip: Annual gifting to family may be an effective way to keep your estate's value below the estate tax threshold. $313,800: The adjusted gross income (AGI) level for joint filers at which the Pease Limitation, which reduces the benefit of some itemized deductions, including charitable contributions and mortgage interest, goes into effect. The figure is $261,500 for individuals. Tip: If your AGI may be close to this mark, consider ways to defer income recognition, such as delaying sales of capital gains property or deferring compensation to future years. 66: Age by which you should check the Social Security Administration's website to determine your Social Security benefits and how to apply if you will reach this age in 2018 or plan to retire. Tip: If you're approaching 65, make sure to review how and when to apply for Medicare. 11/28: Date by which you should add shares to your portfolio to avoid violating the wash sale rule if you plan to sell a security by year-end for a loss but also want to maintain exposure to it in your portfolio. Tip: Remember that the trade date, not the settlement date, is used to determine the 31-day window in which the wash sale rule is in effect. Your Year-End Planning Checklist: Review your investment portfolio and confirm that your asset allocation is in line with your target goal. Consider funding a flexible spending account (FSA) or health savings account (HSA), if you're eligible, during your employer's benefits enrollment period. Confirm your 2017 FSA balance and spend the balance on qualified expenses if it won't roll over into 2018. Consider prepaying anticipated or pledged 2018 charitable gifts before the end of 2017 to potentially give yourself a larger deduction this year. Decide whether prepaying state income taxes may also help your current-year tax situation. Increase your federal tax withholding or take a rollover distribution from a retirement plan if you have underpaid your estimated tax quarterly installments. Consider relocating the administration of your discretionary irrevocable trust to a low- or no-income-tax state to help enhance after-tax returns. Don't forget about required minimum distributions (RMDs). For most accounts, these must begin the year you turn 70 1/2. Consider making a qualified charitable distribution (QCD) of up to $100,000 to reduce the impact of RMDs on your income.

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The information and opinions in this report were prepared by Abbot Downing and the Wells Fargo Wealth Planning Center (WPC), part of Wells Fargo Bank, N.A. Information and opinions have been obtained or derived from sources we consider reliable, but we cannot guarantee their accuracy or completeness. Opinions represent Abbot Downing and the WPC’s opinions as of the date of this report and are for general information and educational purposes only and should not be used or construed as financial advice, an offer to sell, a solicitation, an offer to buy, or a recommendation for any security. Abbot Downing and the WPC do not undertake to advise you of any change in its opinions or the information contained in this report. Wells Fargo & Company affiliates may issue reports or have opinions that are inconsistent with, and reach different conclusions from, this report.

Wells Fargo & Company and its affiliates do not provide legal advice. Wells Fargo Advisors is not a tax or legal advisor. Please consult your tax or legal advisors to determine how this information may apply to your own situation. Whether any planned tax result is realized by you depends on the specific facts of your own situation at the time your taxes are prepared. The implementation and maintenance of certain strategies and techniques in this presentation may require the advice of consultants or professional advisors other than Wells Fargo.

This information is provided for educational and illustrative purposes only.


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