10 recommendations for tax optimization at the end of the year

Фото: Depositphotos

Few days remain until the end of 2016, and for most individual taxpayers, this means closing the tax year. But despite the Christmas week, 10 still has excellent opportunities to minimize taxes.

1. Transfer mortgage payments for January 2017

Usually, the payment date for the month is the 1 number, that is, you still start the year with this waste, but if you make the January payment in 2016 back in December, then this amount can be used to increase your tax deduction for the 2016 year.

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For 2016, the maximum 401(k) contribution amounts are $18 and $24 if you are age 50 or older. These contributions are made on a pre-tax basis, which reduces your taxable income, so try to contribute the maximum amount possible within these limits.

If you have an IRA, contributions are limited to $5,5 for 2016 and $6,5 if you are age 50 or older. You can make contributions until April 2017, however, the sooner you contribute, the faster the impact on your taxes.

For the self-employed, there is a Keogh plan, which allows you to make contributions until the end of the tax season, that is, until April 18 in 2017, and, if necessary, it is extended for the extension of filing the return (maximum 6 months).

3. Check condition Flexible Showcase (FSA и HSA)

If you have a FSA (Flexible Spending Account), make sure that you have used all the funds and closed all the applications on this account in order not to lose the deferred money. Remember that the FSA has no transfer of funds for the next year.

In the case of HSA (Health Flexible Account), you have the opportunity to transfer funds to the next year in the amount of $ 500, and the excess is lost. Therefore, check the status of this account, and if there is an amount in excess of $ 500, then you should make purchases that can be attributed to this account: or, finally, visit a doctor, or make the necessary medical analysis.

4. Sell ​​unprofitable investments to reduce taxable income from profitable

The market in 2016 had several ups and downs. If you have unprofitable investments and at the same time you received investment income in 2016, this is a good reason to consider selling unprofitable investments and reduce your total investment income.

5. Make a charitable contribution

Before you make a contribution, make sure that the organization has the appropriate status and is ready to give you a document confirming the charity.

Please note: if earlier there was no need for any document for donations up to $ 250, now you should have it!

In the case of a donation in the form of household items or clothing, keep in mind that you must use the market value for these items in this state. For example, the price for which you can buy them on craigslist.

Фото: Depositphotos

6. Calculate what will be more profitable for you: standard or classified deduction (standard or itemized deduction)

Before escalating any payments and contributions that can be used for tax deduction, make sure that the total amount of your classified deduction exceeds the standard statutory: $ 6,3 thousand for singles and $ 12,6 thousand for married people filing a joint declaration.

7. Close the mortgage deal

If you are in the process of obtaining a mortgage, then closing the deal this year can significantly increase the amount of tax deduction (tax deduction). Remember that the loan commission (Loan origination fees) can also be used for deduction, as well as the interest on the mortgage.

8. Make advance tax payments for the fourth quarter in December

Many local taxes for the fourth quarter 2016 must be paid before 15 in January 2017, but if payments are made back in December 2016, they can be used for the tax deduction for 2016 a year.

The same approach works for self-employed: you can reduce your taxable income by making payments in December.

9. Streamline your business expenses

It's time to make sure that you have documented all your expenses and properly prepared them.
In addition, in order not to receive the status of a passive investor and the likelihood of paying 3,8% Medicare Tax, you should collect and organize all evidence of your active participation in the business, including: records about hours and types of activity, letters and meeting minutes.

10. Check if you are a Alternative Minimum Tax (AMT) payer

If you fall under the AMT in 2016, many of the tips on accelerating payments in 2016 may not work for you, because this tax is considered without taking into account such important expenses as local taxes and mortgage interest. Therefore, before making a decision, for example, as in paragraph 8 or 1 of this article, be sure to make sure that you are not an AMT payer.

Of course, all of the above tips are general in nature and your tax situation is more complicated than the average, so taking into account all the recommendations, always check if any are applicable for you.

This material does not constitute written tax advice or legal advice. Any information from this material is not created for use by the taxpayer in order to avoid any sanctions imposed on the taxpayer, and also can not be the basis for consultation by third parties. Please always consult a professional service before performing any actions based on the information from this material. Keep in mind that information may be outdated at the time of reading, and we do not undertake to guarantee the updating of information. Copyright www.Solven.pro. Xnumx

Original article published on the site Solven.pro and reprinted with permission of the author.

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See also:

Acceptance of tax returns will begin on 23 January 2017 of the year

IRS recommendations: what the taxpayer should do before the end of 2016 of the year

How to pay taxes in the US if you work for yourself

Another hobby or business: how does this affect the amount of tax?

Who must file a declaration in the USA

As a non-resident to open a business in the US: what taxes you need to pay

Five ideas for female business from Russian immigrant women

How to open a successful small business in the United States. "Russian" stories

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