As the eleventh hour of 2016 comes to a close, it’s time to prepare a clean tax ledger for a new year! Regardless of what money-saving tax strategies you’ve implemented this year, you should take the time now to prepare yourself for April. If you haven’t already done so, try making these seven year-end tax arrangements to save on your taxes in 2017.
Straighten Out Your Financial Records
One of the most stressful things about filing your taxes can be locating all the necessary documents. If you take the time now to find and organize the last few years’ tax returns, any receipts for business expenses, pay stubs, and other records of your financial activities, you will save yourself a headache down the road. Now is the time to get your information in order.
Contribute to Your Retirement
The money that you put into your retirement fund—whether you have a 401(k), IRA, Roth IRA, or another retirement plan—is not taxable, so contributing to your future is a good way to lower the amount of tax you will owe in April. Don’t have a retirement fund set up? Make the move to open one. It’s never too early or late to start saving for retirement.
Land That New Job
It doesn’t matter whether you are newly on the market or have been searching for a while—many of the expenses you incur on a job hunt are tax deductible. Keep track of your mileage if you have to travel for an interview, and always keep the receipts for any hiring assistance services that you use. If you’ve recently started working somewhere new and the distance you have to travel is at least 50 miles more than what you had to travel for your previous employer, you can deduct the expenses.
Schedule a Visit to the Doctor or Dentist
If you can’t remember the last time you got a checkup or a teeth cleaning, you should consider scheduling an appointment with your doctor or dentist. Some medical expenses can be deducted from your taxes. The factor that determines whether you can write off your medical or dental visit, according to the IRS, is that the expenses have to be equal to or greater than 10% of your adjusted gross income (if you’re over 65, that percentage drops to 7.5). If you have multiple dependents, those expenses can add up fast.
Donate to a Charity for the Holidays
Charitable organizations are always seeking donations, but during the holiday season, their need is even greater than usual. Take an inventory of any clothing, toys, electronics, and other usable items in good condition and consider donating anything you don’t need anymore. If you want a simpler way to contribute, consider giving cash. Be sure that the organization you choose qualifies, and always get a receipt for any charitable giving.
(Legally) Reduce Taxable Income
Many tax deductions and credits require that your income does not exceed a certain amount. For those who think they may surpass that amount by a small margin, there are ways to legally reduce the amount of income generated in a given year. One example, if you have your own business, is to allow a client with a payment due this month to delay their due date to the following year. If you are considering using this method to reduce your taxes, always talk to a tax professional to make sure you are following the law.
Assess Any Major Life Changes
Can you think of any significant changes that occurred in your life during the past year? A lot of the time, big changes mean big tax savings. If you’ve recently gotten married, had children, bought your first home, or gone back to school, you are probably eligible for tax savings that you weren’t eligible for in the past. Go over any life-changing events you experienced in 2016 and research whether they are deductible or qualify for a tax credit.
The end of the year is always hectic, but if you take the time to tie up any loose ends now, you will thank yourself during next year’s tax season. Need help considering all of your year-end tax options? Call your Coral Gables tax professionals at Calas Group Accounting and Financial Services. Our team of financial experts will help you start the new year off right.