Simple strategies to make 2016 your best tax year ever
Maybe 2015 was a good tax year – maybe it wasn’t. The good news is, it’s not 2015! A new year means 365 days to change your strategies for this tax year. Below are a few tips we recommend to start saving money.
Contribute well, contribute early. We’ll say it once and we’ll probably say it again, but contributing to your retirement funds, in particular your IRA, is one of the best ways you can save money for retirement. To get the most from your IRA contributions, try to add to your IRA as early as possible in the year.
Give it away. This year (2016) you can give away $14,000 ($28,000 if joined by a spouse) to whomever and whatever you want, without paying federal gift tax. And if you want to give away more, that’s okay too, because these additional gifts will be taxed at the donee’s rate, which is most likely lower than yours.
Take advantage of employer benefit plans. Getting to 10 percent of your income in medical expenses is hard to do, and we hope that your health is good enough that won’t happen. To make the daily medical expenses work for your taxes, look into employer benefits plans like flex spending accounts (FSAs) or health savings accounts (HSAs). These plans let you redirect some of your salary to pay these types of expenses with pre-tax dollars. Ask about their roll-over rules to see what amount carries over at the end of the year. Warning — some plans do not have a roll-over amount, which means you need to take careful notes and plan your medical expenses for the year as best as you can.
Keep meticulous records. Sadly, many taxpayers lose out on big deductions and tax credits because they don’t keep good records of their expenses. This year, resolve to keep receipts; track mileage and gas to a T; and note additional income, no matter how big or small.
If you have questions or want more tax-saving tips, call us any time. Here’s to 2016, your best tax year yet!