Tax planning for year end is a greater challenge in a period of political change. Tax reform resulting in lower tax rates - 3 brackets: 12%, 25%, and 33% -- and fewer deductions are proposed. The 3.8% surtax on the capital gains and other investment income of upper income taxpayers is also on the chopping block. Of course none of us knows what tax law changes will ultimately pass in 2017, making planning more difficult. If 2017 tax rates do decrease, 2016 may be a particularly good year to defer income and accelerate deductions. Following is a checklist of actions that may help you save or defer tax dollars if you act before year-end. Of course, not all alternatives will apply to your particular situation. Please review the following list and contact us to discuss the benefit and your eligibility for these actions.
- Consider acceleration of contributions to employer pre-tax retirement accounts
- Consider the timing of Roth IRA conversions of traditional IRA funds
- Contribute to a Health Savings Account (HSA)
- Review required minimum distributions from retirement accounts
- Make gifts sheltered by the annual gift tax exclusion
- Increase your withholding if you are facing a penalty for underpayment of estimated tax
- Consider the timing of year-end deductions
- Contribute to charities directly from IRAs (if at least age 70½)
- Consider eligible tax credits for energy saving improvements to your home
- Consider deducting sales taxes instead of state and local income taxes
- Maximize the above-the-line deduction for qualified higher-education expenses
Please visit our website for more information. You should examine tax planning options carefully before initiating action. We are happy to discuss these with you and tailor a tax saving plan that will work best for you.
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