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Seven Last Minute Tax Tips for 2016 By Elizabeth F. Hassler, CPA Herbein + Company
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017 is here, and it’s time to get your taxes in order! But the good news is that there is still time to implement some tax saving ideas and strategies for 2016.
Listed below are the top tax tips for the 2016 tax year. Have you looked into these tips to save some additional tax dollars this year? TAKE SOME CAPITAL LOSSES – Biting the bullet and selling some loser securities before year end can help to reduce your tax liability. If the security is currently worth less than what you paid for it, selling it will trigger a capital loss which can be used to shelter up to $3,000 of ordinary income. Any capital loss in excess of $3,000 is carried forward to the next year. CONTRIBUTE APPRECIATED STOCK – On the other hand, if you have appreciated stock that you’ve held for more than one year, consider donating the stock or mutual fund shares to charity. You’ll avoid paying tax on the appreciation, but are still able to deduct the donated property’s full value as a charitable contribution subject to certain adjusted gross income phase outs.
of courses related to the curriculum in which the educator provides instruction.
are $6,750 for family coverage and $3,350 for individual coverage, plus an additional $1,000 for anybody who is 55 or older at the end of 2016. Any distributions used to pay unreimbursed medical expenses are tax free. The funds can remain in the HSA indefinitely.
CHILD AND DEPENDENT CARE CREDIT – If you paid to have someone care for your child who is under 13 years old you might be eligible for this credit. The credit percentage allowed ranges from 20% to 35% MAXIMIZE CONTRIBUTIONS TO and depends on how many children you have 401(K) PLANS – If you have a 401(k) plan enrolled in someone’s care and your adjusted at work, this is typically the time of year in which gross income for the year. Also consider check- you can change the amount of contribution that ing with your employer to see if they offer a you want to set aside on a tax-free basis. Try dependent care benefit plan. A dependent care to contribute as much as your budget allows benefit plan allows married couples to contribute as any contribution you make directly reduces up to $5,000 of tax free benefits which then the amount of wages on which you will pay can be used to help offset the cost of child federal tax. Some employers make matching care. Since the costs of dependent care can contributions, so if yours does, try to maximize add up fast, consider using both a dependent your contribution so that you are not giving care benefit plan and then claim the child and away “free money.” dependent care credit for the costs incurred exceeding $5,000. Whatever tax saving strategies you are using, always be aware that at a minimum you should SAVERS CREDIT – This credit is meant to evaluate your current and at least one future benefit low to moderate income taxpayers who tax year. Without looking at multiple years, tax are making eligible retirement contributions to savings in one year could backfire and cost you a 401(k) or individual retirement account. The additional money in the future. credit can be as much as $2,000 and is based on a percentage of the contributions made and varies based on your income level.
TEACHERS’ CLASSROOM EXPENSE DEDUCTION – Last year’s tax legislation per- CONSIDER A HEALTH SAVINGS manently extended this above-the-line deduction. ACCOUNT – If you are enrolled in a high Eligible educators may claim a deduction for up deductible health plan and do not have any other to $250 for classroom expenses and starting in medical coverage, you may be eligible to make 2016 eligible expenses now include professional either pre-tax or tax deductible contributions development expenses which include the cost to a Health Savings Account (HSA). The limits
Elizabeth F. Hassler, CPA Herbein + Company
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