Thursday, October 20, 2016

Year-End Tax Planning

Here are five money saving ideas for your consideration (Sorry I cannot give an in depth review of these ideas. You need to speak to your tax advisor or send me an email. If I can assist, I will be happy to do so.)

If your company offers a flexible spending account arrangement for out-of-pocket medical or child care expenses, or a health savings account for medical expenses, make sure you are maximizing the tax benefit.

If you own a partnership or S corporation that is expected to generate a loss this year, you may want to make a capital contribution (or in the case of an S corporation, a loan) before year end to ensure you have sufficient basis to claim the loss deduction.

By this time, you should be preparing an estimate of your tax refund or balance due for 2016. Consider increasing withholding (both Federal and State) from your paychecks now through the end of the year or deposit an additional amount before the end of the year. You just may save on penalties by doing this because the withholding is considered made as of the beginning of the year regardless of when the withholding is withheld.

If you have reached age 701/2, consider making charitable donations directly from your IRA. The donations are tax-free to you, which equates to a 100 percent write-off (up to $100,000 per individual IRA owner per year), without having to itemize deductions. Caution: to get this tax break, the funds must go directly form the IRA to the charity.

If you own any securities that are all but worthless with little or no hope of recovery, consider selling them before the end of the year to capitalize on the loss this year. The loss will be a write-off up to $3,000, $1,500 for married filing separately, or offset gains.