Year-End Tax Planning Tips 2016

It’s almost year-end.  Consider some planning opportunities to reduce your tax bill and increase any refund.  Let’s estimate your tax liability in the 4th quarter to best utilize some of these strategies.  If you have income without withholding, 4th quarter payments are due January 15th 2017 to avoid penalties.


  • Make charitable contributions before 12/31: Worthy causes abound!
    • Political contributions are not deductible, but many of your favorite causes may have 501(c)(3) entities that accept deductible contributions in addition to their political or lobbying arm. Watch for “legal defense & education” funds, etc., and the magic language – tax-deductible to the extent allowed by law!
    • Don’t forget that many of your museum, zoo, public TV & radio contributions may be wholly or partially deductible. Find that receipt or email; save the PDF & bring it or upload it to my portal.
    • Use envelopes &/or checks at church, temple or mosque and get the letter! Cash is not deductible, and a cancelled check is not enough for contributions over $250.
    • Check your cell phone bill if you do the $1 or $10 donation texts.
    • Document your volunteer service. Unreimbursed out of pocket expenses and travel/mileage may be deductible; your time is not.  There’s a form on the website at
    • Clear out the closets & basement; call or check the website for a worksheet to value donations.
    • If you’re over 70½ and taking required minimum distributions from IRA’s, the “qualified charitable contribution” has been made permanent. You can contribute directly to a charity from your IRA and not report the income.  For many retired folks, this can provide large savings.  Ask me how.


  • Review your investments. You may be able to take some gains at rates as low as zero percent, or reduce your taxable income by taking up to $3,000 a year in losses.


  • Some home energy credits have been extended through this or beyond. Contact me for details.


  • Timing: Many deductions and credits have income limitations or phaseouts.  And rates have increased the last few years for upper-income taxpayers.  You may lower the tax for one year or both if you:
    • Can defer or accelerate deductible expenses. Making your January mortgage and tax payments in December or paying outstanding medical bills may save tax – or not.
    • This strategy requires some planning, but can work for many people. With itemized deductions, shifting timing can save tax by taking the standard deduction in alternate years.


  • Reduce your tax & save for the future: Boost your 401(k) now, or anytime you get a raise – before you start spending it.  Or open an IRA if you don’t have an employer plan.  If you own a business, retirement plans offer a golden opportunity.  You can do an IRA up until April 15th, but some plans require action before year-end.


  • If you may owe, up your withholding before year-end and avoid underpayment penalties.


Employee Benefits Open Season:  If you still have time & want help determining tax benefits, call!


Post-Election Update:  The incoming administration in DC may result in major tax changes.  It’s possible that rates might go down for you, especially if your income is higher.  If you can push income off into 2017, it might be beneficial.  There have been numerous proposals for tax reform in recent years, but no movement due to the gridlock in Congress.  Some of these proposals could be beneficial.  Stay tuned.


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