Each year we must report to Uncle Sam whether we likei t or not. It is not enjoyable for anyone, but must be done. We put together a list of some end of the year ideas that might be able to save you some hard earned money on your taxes.
- If you itemize your deductions, pay your real estate taxes before December 31st. You have to pay them anyway, so might as well use the deduction this year.
- If you have already sold stock for a gain in value, consider selling some stocks you have losses in to offset the gains if you are in a higher tax bracket. But don't make the mistake of selling and then repurchasing right away as the IRS doesn't allow that loss.
- If you itemize your deductions, now is a great time to clean out your closets and give those old clothes to a charity. Get a receipt and itemize what you have to look up values. Or give money to your favorite charity by the end of the year. Just be sure to use a check and get a receipt. You can also give appreciated stock or mutual funds to a charity and the gain won't be taxable at all to you.
- If you are not at the maximum contribution amount allowed for your retirement plan, consider increasing it now. This will lessen your taxable income and put the money into your pocket and not Uncle Sam's.
- Consider contributing to a traditional IRA by April 15th of 2016. There are restrictions on income and if you already participate in a retirement plan.
- Add more to your Health Savings Account. This is a deduction from income for you.
- If you are a sole proprietor, partnership or S corporation, consider purchasing needed equipment by the end of the year.
- If you itemize or have a business, consider if you qualify for a home office deduction. The IRS has a new simplified $5 per square foot formula that allows up to a $1,500 deduction. Alleviates calculating all your home expenses and keeping track of depreciation on your home.
- If you are self employed, consider a Simplified Employee Pension plan, SEP. You are able to contribute up to 20% of your net income. If you have a S corporation, you can contribute up to 25% for all employees including yourself.
- Keep track of business miles with a log and take advantage of this simplified deduction of 57.5 cents per mile.
- If you itemize, you can deduct job hunting expenses for a job in the same field. This is subject to the 2% of adjusted gross income threshold.
There are some deductions that were not renewed and have yet to be signed into law to be in effect for the 2015 tax year. These include the sales tax deduction, mortgage insurance premium deduction, above the line deduction for qualified tuition, exclusion of income for discharge of qualified principal residence indebtedness, $250 deduction for school teachers.
For more information or to speak confidentially with us, contact us at www.jonescpas.com
or call 727-845-4166.