Saturday, August 18, 2018
New York Times: 3 Tax Breaks That May Be Better in the Long Run, by Paul Sullivan:
Talk to a tax expert long enough and you’re likely to hear some variant on this phrase: Don’t let the tail wag the dog.
It makes sense. Focus too much on the details, and you may lose sight of the big picture. When it comes to taxes — the tail in this case — a short-term tax benefit may not be the best investment or lifestyle decision.
The tax overhaul that was rushed through the Republican-controlled Congress and enacted last year gave taxpayers little time to grasp its implications. As the new law now becomes understood, accountants and tax advisers say the tail is wagging like an excited Labrador hovering over a T-bone steak. And advisers say their job is to calm the dog before he does something he will regret.
“You have to be careful making permanent decisions based on a temporary law,” said Mitchell Drossman, national director of wealth planning strategies at U.S. Trust. “This tax law is a temporary provision because most of the individual tax provisions sunset at the end of 2025.”
In many cases, once these tax-driven decisions are made, they either cannot be undone or they will cost people more than they saved to undo them. And it is not limited to the very wealthy; middle- and upper-middle-class earners could fall into this trap.
Short-term benefits may look desirable, but here are three tax breaks that may be better in the long run.
- Estate Tax ...
- Capital Gains Tax ...
- Charitable Giving ...
These tax changes seem to be affecting the most taxpayers, but confusion abounds throughout the new tax code. And the government is still trying to clear things up.