Year-End Tax Tips
- Review your portfolio. Consider taking a loss if you have substantial capital gains.
- Max out your retirement plan contributions. 2017 maximum IRA contribution is $5,500 (plus $1,000 if age 50 or over). 2017 maximum 401(k) contribution is $18,000 (plus $5,500 if age 50 or over).
- Consider contributing to a 529 Plan if you have children or grandchildren. For example, New York allows a deduction up to $5,000 (or $10,000 for married filing joint filers) for contributions made by an account owner to an account belonging to New York’s 529 College Savings Plan.
- Consider increasing your withholding if you anticipate owing tax. This can help you to avoid an underpayment penalty since the government considers withholding to have been paid evenly throughout the year.
- Save receipts for medical supplies and equipment such as prescriptions, doctor co-pays, dental expenses, insulin testing supplies, canes, braces, orthotics, eyeglasses, contact lenses and hearing aids, etc. Medical expenses that exceed 10% (or 7.5% for those 65 and over) of AGI are deductible.
- If you’re self-employed, try bunching expenses before year end. Stock up on supplies or pre-pay some expenses.
- Pay your 4th quarter 2017 estimated state and/or local taxes by December 31, rather than the January 15, 2018 due date. However, if you are subject to AMT speak to your CPA first.
- Make charitable donations and be sure to get a receipt. Both cash and non-cash donations to a registered charity will get you a deduction. Make sure you have documentation, receipts and acknowledgements as necessary.
- Volunteer! It’s good for your spirit and your taxes if you keep records. If you use your vehicle for volunteering and keep good records, you can deduct $.14 per mile or the actual cost of gas. Tolls and parking are deductible whether you take a per-mile or actual cost deduction, too.
- If you are 70 ½ years old or older this year, make sure you take your required minimum distribution from your traditional IRA. You do have the option to defer your first RMD until April 1 of the following year, but if you do so, you will need to take 2 RMDs in one year for 2018.
By: Honorine M. Campisi, CPA