Tax Tips to Lower Your 2016 Tax Bill
You still have time to cut your taxes — and make smart moves to lower next year’s as well. As a certified CPA myself, I am swimming through a pile of tax returns for my clients! I wanted you to have some good info on how to lower your 2016 tax bill, if you haven’t filed yet. Here are some effective tips from SANDRA BLOCK, Senior Associate Editor, Kiplinger’s Personal Finance.
Most taxpayers approach the tax-filing deadline with a mixture of fear and loathing. But this year, there are reasons to be more sanguine. For one thing, because 2016 was an election year, Congress didn’t tinker much with the tax code. If your personal circumstances didn’t change last year, your tax bill probably won’t change much, either. And if you’re a do-it-yourself filer, you don’t have to get up to speed on a slew of new rules.
Because April 15 falls on a Saturday this year and April 17 is a holiday in Washington, D.C., you have until Tuesday, April 18, to file your federal tax return.
Here are some ways you can still trim your 2016 tax bill, plus potential speed bumps.
Contribute to an IRA.
If you’re not enrolled in a 401(k) or other workplace retirement plan, you can deduct an IRA contribution of up to $5,500 ($6,500 if you’re 50 or older), no matter how high your income. You have until April 18 to make a 2016 contribution to your IRA.
Fund a health savings account.
You also have until April 18 to set up and fund a health savings account for 2016. To qualify, you must have had an HSA-eligible insurance policy at least since December 1.
Get credit for tuition payments.
The American Opportunity tax credit, worth up to $2,500 per eligible student for the first four years of college, is a valuable tax break for parents of college students.
Health care housekeeping.
President Trump has vowed to repeal the Affordable Care Act, but it was still in effect in 2016, so you’ll have to deal with it on your tax return. To avoid a “shared responsibility payment”—longhand for a penalty—you must prove that you had qualifying health insurance in 2016 or were eligible for an exemption.
Want to investigate these ideas a little deeper? Additional details HERE