PHOENIX — The Internal Revenue Service wants taxpayers to know they have some time left to make any final tax moves for the 2016 tax year.
“There are many opportunities for taxpayers to legitimately reduce taxes or defer income as the year winds down,” IRS spokesman Bill Brunson said. “A little tax planning now could save you time and money later.”
A few tax items to consider:
- Make Charitable Contributions. Make charitable contributions (cash or non-cash items) on or before Dec. 31. Give to a qualified public charity and keep a paper trail. Non-cash items such as clothing and household items must be in good used condition or better to be deductible. Donations charged to a credit card by Dec. 31 are deductible for 2016 even if paid in 2017. Taxpayers must be able to itemize deductions on IRS Schedule A, Form 1040, in order to benefit.
- Sell Loosing Investments to Offset Capital Gains. Taxpayers can reduce capital gains with capital losses, dollar for dollar. Up to $3,000 of additional capital loss can be used to reduce ordinary income. Any remaining loss can be carried over to next year.
- Contribute to a Retirement Account. The maximum 2016 IRA contribution is $5,500 ($6,500 if age 50 or over). The maximum contribution for a retirement plan such as a 401(k), 403(b) and most 457 plans is $18,000. ($24,000 if age 50 or older). Eligible taxpayers can also deduct IRA contributions.
- Low and Moderate Income Workers Can Get Credit from the Retirement Savings Contribution Credit or “Saver’s Credit.” This under-the-radar tax credit may be worth up to $2,000 ($4,000 if married filing jointly). It is available to eligible taxpayers who contribute to a retirement plan and whose income is less than $61,500.
- Gift Giving. Taxpayers can give a gift worth as much as $14,000 ($28,000 for a married couple) in cash and/or property in 2016 to another person without having to file a gift tax return. Gifts to individuals are not deductible.
- Save Receipts and Paperwork. Accurate recordkeeping provides a good reminder at tax time. Good records insure you can take full advantage of any credit, deduction or allowable expense you qualify for. Keeping good tax records doesn’t cost anything and are well worth the time involved.
Visit IRS.gov for tax answers and tax help.