Last Minute Tax Planning Tips For 2016
Every year in December on top of the holiday rush many people have that aha moment, “I’m going to be filing my taxes due and I might have a problem!” There are many things you can do that will help that can have an effect, but often a small tax change at best and then there are other things that can be done that can have a very large affect. With little time left to act you should focus on the things that can really move the needle and not the minor items, here are some examples. Because people are shopping and giving charity comes to mind. Dropping items at a Goodwill, or Salvation Army and stuffing the kettle every time you walk by one are excellent ways to help your fellow man, but have very little effect on the average tax payer’s bill. If a client when filing a tax return adds up charitable donations, healthcare expenses, mortgage interest on a Schedule A and doesn’t get above 10% of taxable income than they don’t count at all. WE AREN’T SAYING DON`T DO THOSE THINGS……YOU SHOULD! We are saving that you should not count on those items to make any real savings for you in 2016 and there is only 3 weeks left to make something great happen, so drop off the clothes on Jan 2nd instead and if you are over 70 use the time you would have used getting the clothes together and boxing them and driving in the holiday traffic to instead have your investment advisor set up a direct gift from your IRA to the same Charity. It still satisfies “RMD” (minimum IRA withdrawal requirements) but takes that income completely off your taxable income! If you’re a small business owner that files as a schedule C set up your kids to receive payroll from your company and get checks issued and then cashed from your company account before Dec 31st. (If they help any at all in your company) They don’t pay FICA, FUTA or SUTA and neither do you on the match so its cash out of the company pretax. Then as long as it’s less than 6500. For the year than they also don’t pay federal tax on that income. The list goes on and on so the moral of this Holiday Story is Call us your Tax Planners and squeeze in a 30 min phone call, Skype or any other kind of meeting and let’s go through our check list of items often overlooked! We want the New Year to be great for you, not paying as much Federal Tax is a good way to start.