Assuming you want to keep your 2016 taxes as low as possible, consider these valuable tax maneuvers you’ll have to complete by the end of this calendar year.
MAXIMIZE RETIREMENT PLAN CONTRIBUTIONS
If your employer offers a 401(k) or other type of deferred pension plan, make every effort to contribute the maximum amount allowable — especially if your employer matches your contribution. Otherwise you are leaving money on the table that could benefit you in your retirement. Think of the employer match as an immediate 100 percent return on your money. Even if there is no match, all of the funds are tax-deferred and grow tax-free.
MAKE CHARITABLE CONTRIBUTIONS
Deducting charitable contributions requires good recordkeeping. From front-door solicitations to donations at the supermarket or pet store checkout, opportunities to give abound—and add up. Online and smart device apps can help track spur-of-the-moment contributions, although you still need to have records in the form of a cancelled check or bank or credit card statement, showing the date, amount, and name of the recipient.
For contributions of $250 or more of any kind, you’re required to obtain a written acknowledgement from the charity. For donations of clothing and household items, the rules have gotten stricter for the condition of the items and the documentation. Be sure to know the rules before you donate and take photographs of valuable items.
Travel for charitable activities is also deductible at 14 cents a mile in 2016. Again, good records are a must, both for documenting your trips and for simply remembering that you took them.
OFFSET GAINS AGAINST LOSSES
If you want to deduct losses on stocks that have depreciated, be sure to liquidate those stocks in time to ensure the trades settle by year-end. These losses can come in handy if you have considerable gains on other stocks, as the deductible losses from depreciated stocks that you sell can be used to reduce the taxes you owe on those gains.
WHAT WILL A NEW ADMINISTRATION MEAN TO YOU?
Are you wondering if a new president — and a wave of newly elected senators and representatives — could have an impact on tax, business and financial regulation and on your tax return or overall financial planning? Given the longstanding gridlock in Washington, it seems reasonable that we might not see significant change, at least over the near term. However, you can be sure we will alert to any new developments that may have an impact.