Thursday, December 8, 2016

Tax Planning: Last Minute Stuff

Every year around the third week of December Congress decides to tweak the tax code. And I would suggest that you watch for changes thru 2017.


I have no idea what the tax landscape will look like next year so if you plan to itemize on your tax return this year you should be looking at ways to increase your deductions.

If you pay estimated taxes – pay the last quarter of your state tax in December instead of the January 15th deadline so you get the deduction for this year.

Bunch your medical deductions if you are already over the 10% threshold of income. Pre-pay any medical or dental bills such as kid’s orthodontist bills. Also, keep track of the miles you have traveled for they are also deductible at 19 cents a mile. The easiest way to do that is check your calendar to calculate how often you have been to the hospital and doctors. The income threshold is 7.5%, if you are over 65. Next year the threshold will be 10% for everyone.

Pay your real estate taxes in December instead of January if you can use the deduction this year.
It may not be too late to increase your contributions to your retirement plan if your plan will allow it. And you may even be able to do the catch up in a lump sum. Check with your plan provider or benefits department. Also, make some plans for next year and try to contribute the maximum you can afford.

Clean out the closets and make a charity run to one of the Goodwill or Salvation Army drop off centers. Be sure you get a receipt. Be reasonable as to what you take as a deduction. Remember it is used clothing you are giving them. According to the IRS, you can no longer claim deductions for used clothing and “household goods” that are not in “good” condition.
Check the Goodwill’s website to get a list of suggested deductions amounts.

According to AARP, Americans gave $373.35 billion to charity in 2015 over $1 billion a day!