12 Days of Tax Tips
What would you like to find in your stocking this year? How about a lower tax bill for 2016! Brought to you by the friendly elves at your CPA firm, here they are, the 12 days of tax tips.
Each day, unwrap a tax tip that can help you or your business save on your 2016 tax bill.
- Make gifts sheltered by the annual gift tax exclusion before the end of the year and thereby save gift and estate taxes. The exclusion applies to gifts of up to $14,000 made in 2016 and 2017 to each of an unlimited number of individuals.
- Postpone income until 2017 and accelerate deductions into 2016 to lower your 2016 tax bill. This strategy may enable you to claim larger deductions, credits, and other tax breaks for 2016 that are phased out over varying levels of adjusted gross income.
- Pay contested taxes to be able to deduct them this year while continuing to contest them next year.
- Increase the amount you set aside for next year in your employer’s health flexible spending account (FSA) if you set aside too little for this year.
- Corporations should consider accelerating income from 2017 to 2016 if it will be in a higher bracket next year. Conversely, it should consider deferring income until 2017 if it will be in a higher bracket this year.
- Businesses may be able to take advantage of the “de minimis safe harbor election” (also known as the book-tax conformity election) to expense the costs of lower-cost assets and materials and supplies, assuming the costs don’t have to be capitalized under the Code Sec. 263A uniform capitalization (UNICAP) rules.
- Settle an insurance or damage claim in order to maximize your casualty loss deduction this year.
- If you become eligible in December of 2016 to make health savings account (HSA) contributions, you can make a full year’s worth of deductible HSA contributions for 2016.
- Realize losses on stock while substantially preserving your investment position. There are several ways this can be done. For example, you can sell the original holding, then buy back the same securities at least 31 days later.
- Consider using a credit card to pay deductible expenses (such as charitable contributions) before the end of the year. Doing so will increase your 2016 deductions even if you don’t pay your credit card bill until after the end of the year.
- You may be able to save taxes this year and next by applying a bunching strategy to “miscellaneous” itemized deductions, medical expenses and other itemized deductions.
- To reduce 2016 taxable income, consider deferring a debt-cancellation event until 2017.
All holiday frivolity aside, give us a call if we can help with your year-end tax planning. Happy holidays to you and your loved ones, from all of us at Scott and Company!