Gerson Preston Considers Strategic Tax Planning

That holds despite the debate over tax reform in Washington. House Republicans hope to introduce a tax bill on Nov. 1, sources told CNBC on Wednesday.

Regardless of the outcome, there are moves you should be thinking about now.

“The first thing I would suggest is to pull as much information as possible from this year and take a look to see where you’re at,” said Tim Steffen, director of advanced planning at Milwaukee-based investment firm Baird.

From there, you can troubleshoot which areas may trigger a bigger bill from the IRS.

Investors should examine their portfolios closely for gains, particularly with the S&P 500 on a record streak.

That includes taxable investments such as mutual or index funds, according to Michael Krol, head of wealth advisors, planning and business development at Waldron Private Wealth, a wealth management firm in Bridgeville, Pennsylvania.

“What happens is everybody is happy because you’re making money and not paying as much attention to real-world capital gains,” Krol said. As a result, you could face a bill that’s not really necessary, he said.

Individuals should check on their capital gains rates, as they often do not have an accurate idea of where they really stand, according to Steffen. From there, they can make decisions about what steps would make the most sense.

With retirees, this is particularly important if a gain will be considered income that will cause their Social Security benefits to become taxable.

“You have to be careful of this ripple effect that happens through your tax return,” Steffen said.

To offset gains, consider selling assets that have lost value to help minimize the effects of other portfolio growth.

While donating cash is always an option, other strategies may also help you mitigate investment gains.

Investors can donate investments like stocks or mutual funds that have had significant appreciation, suggested Michael Palazzolo, owner and financial planner at Fintentional, a Birmingham, Michigan-based financial planning firm. An investor may have invested $2,000 in a mutual fund held in a taxable account and watched it grow to $5,000. By donating it, the investor gets credit for the $5,000 donation and never pays levies on the $3,000 gain.

Investors may also want to consider establishing a donor-advised fund, which lets you donate the money now and decide where to give to later.

“Make sure you’re giving because you want to and can afford to, and not just because of the tax break,” Palazzolo said.