As the hectic holiday season approaches, most people are wondering how they’ll be able to save on holiday shopping rather than what they can do to save on taxes.
So, let’s explore some tax moves you should consider making before the calendar turns to 2017 to help you reduce your tax bill from Uncle Sam.
1. Get your tax records in order to be prepared for some changes in 2017.
Gather up and organize all of your tax-related documents and files – receipts, invoices, pay stubs, paychecks, previous years’ tax returns, mileage logs, and anything else you’ll need to have handy in the spring.
It’s even more important to prepare for 2017 because some impending changes to filing deadlines and refunds are on the horizon. Here are the most important ones:
- Tax refunds are expected to be delayed until at least Feb. 15, 2017 for taxpayers who claim the Earned Income Tax Credit and the Additional Child Tax Credit. The IRS is taking steps to thwart tax fraud and will be targeting taxpayers who claim either of these credits to ensure they are being claimed properly. Additional documentation may also need to be submitted with your return for proof of eligibility.
- The new filing deadline for C corporations operating on a calendar year will be April 15 beginning in 2017. For C corps on non-calendar years, Form 1120 will be due by the 15th day of the fourth month after the close of the corporation’s tax year. C corporations that have tax years closing on June 30 will still have a filing deadline of September 15 – until 2025 when a new deadline will be enacted.
- The new filing deadline for partnerships operating on a calendar year will be March 15. This is when Form 1065 must be submitted to the IRS. For business partnerships on non-traditional tax calendars, the deadline will be the 15th day of the third month following the close of the partnership’s tax year.
2. Use legal ways to reduce your income before year’s end.
Many IRS tax credits require taxpayers to meet certain income thresholds in order to be eligible for them, including the child tax credit. If you foresee exceeding an income threshold for one or more of these tax credits, it might be worth reducing your taxable income by the end of 2016 if you can. Of course, this can be done completely legitimately so as not to trigger an IRS audit.
For example, let’s say you are expecting a holiday bonus from your employer in December. Or, if you work as a small business owner, maybe you are anticipating some payments from clients before December 31st. If possible, consider delaying the arrival of this income into your bank account. It can help reduce your expected amount of 2016 taxable income, and it can therefore allow you to stay within the limits of various tax credits and other benefits designed to reduce your tax liability. Of course, always use legal means when going about this process.
3. Advance your career.
If you are looking to advance your career by landing a new job, now is a good time to at least give it a shot. While some companies may not be hiring until January rolls around, you might be surprised at the opportunities out there.
You can also save on taxes by doing this now. Job search expenses like using a resume review service, registering for a paid job board, or traveling for a job interview are tax deductible. Plus, if you relocate to an area more than 50 miles from your current residence to take a new position, this move is deductible as well.
4. Contribute to your retirement plan(s).
A simple and proven way to cut your taxable income is to take some of your money and put it into a retirement plan. This could be a traditional 401(k) you maintain through an employer. Perhaps you have a regular IRA or a Roth IRA, or maybe you maintain an SEP IRA for the small business you run. If you don’t have one of these retirement accounts set up, consider opening one through your financial institution of choice, and then contribute to it before the year is over.
5. Schedule your annual appointments with your doctor and dentist.
If you are in need of some type of medical checkup in the near future, consider scheduling an appointment before January 1 with your primary care physician, dentist, or other medical practitioner. That’s because you may be able to take a deduction on your income by writing off medical costs.
Remember that to deduct medical expenses, they must add up to 10% of your adjusted gross income (AGI), or 7.5% if you are over the age of 65. This is why it may be worth it to get that yearly checkup or dental cleaning prior to the start of the new year.
6. Find opportunities to make charitable contributions.
Making a charitable contribution at the holidays is extra special – and a good tax-saving move to boot.
Spend a few hours to clean out your garage, closet, spare bedroom, or storage unit. Then donate some of these unnecessary items to qualified charitable organizations this holiday season. Clothes, toys, electronics, vehicles, and stocks are just a few of the many things you can give to a qualifying charity and write off on your taxes when filing with the IRS. If you take a quick look around your house, you’d probably be amazed at how much stuff is right there in front of you that can go toward a good cause. Just remember to get the proper documentation and receipts from the organizations to which you donate. You’ll need this to verify your deductible contributions.
To learn about additional end-of-year tax tips, turn to 1-800Accountant today. Call 1-800-222-6868 or visit www.1-800Accountant.