Albany, NY; – As 2016 enters its final days, UHY LLP is offering a series of tips for individuals as they look to reduce this year’s taxes and plan ahead for 2017.
“The end of the year is an excellent time for individuals to take a closer look at their finances and assess their options as they set goals for 2017,” said UHY LLP partner Jim Daniels. “I encourage everyone to take a closer look at this year’s taxes and seek accounting guidance on your particular circumstances to make the best choices for you and your family.”
UHY LLP offers the following guidance and tips on strategies that can improve an individual’s tax circumstances for 2016 and beyond:
- HSA contributions
The maximum yearly HSA contributions of $3,350 for individual coverage and $6,750 for family coverage can be made before the year’s end to receive the above-the-line deduction. Individuals ages 55 or older can also get an additional $1,000 as a catch-up amount.
- Stock losses
Individuals should consider selling losing stocks before year-end to offset capital gain income. There is a waiting period of 31 days to repurchase the “loss” shares in order to preserve the 2016 deduction.
- Charitable contributions
Making charitable contributions before the end of the year can increase your itemized deduction for 2016. Consider contributing long-term appreciated securities to a qualifying charity. Individuals will be able to deduct the fair market value of the securities as an itemized deduction without including the appreciation on the securities as income.
- Medical expenses
Taxpayers should consider paying for planned medical expenses before year-end to increase your itemized deduction in 2016. Itemizing taxpayers ages 65 and older can deduct medical expenses to the extent they exceed 7.5 percent of adjusted gross income. This floor will rise to 10 percent in 2017.
- Retirement plan distributions
Don’t get stuck with an underpayment of estimated tax penalty by increasing the tax withholding from these distributions. Taxpayers 70 and a half years old should make sure they have made their required minimum distributions (RMD) to avoid the penalty of 50 percent of the amount of the RMD not withdrawn.
Taxpayers that have reached 70 and a half years old may consider making a direct transfer of IRA funds (not to exceed $100,000) to a qualifying charity. While there is no deduction allowed, the amount is also not included in income, thus not increasing gross income for purposes of any phase-out deductions or credits. By not increasing the adjusted gross income, the direct transfer of IRA funds to the charity may not increase state income tax, depending on the state of residency.
- Make year-end gifts
Individuals may gift up to $14,000 per year tax-free to another individual. This is increased to $28,000 for donors and their spouses who consent to gift-splitting.
- Potential to earn tax-free gains
Individuals may exclude all, or part, of the gain realized on qualified small business stock for more than five years.
- Pre-pay qualified higher education expenses
Unless Congress extends, the above-the-line deduction for qualified higher education expenses will not be available after 2016. Taxpayers should consider accelerating educational expenses for the first quarter of 2017 into 2016.
- Accelerate big ticket purchases
Individuals expecting large ticket purchases, such as a boat or a car, should consider deducting sales tax in lieu of state and local income taxes as an itemized deduction in 2016.
- State income taxes
Taxpayers who will not be in alternative minimum tax should consider paying any estimated tax payments by December 31 instead of January 15, 2017.
For more information about UHY, please visit www.uhy-us.com.
About UHY LLP
UHY LLP, a licensed independent CPA firm in New York, performs attest services through an alternative practice structure with UHY Advisors. UHY LLP conducts operations in New York as a subsidiary of UHY Advisors, Inc. The firm has offices in: Albany, NY, Farmington Hills, MI, Oakland, NJ, Chicago, IL, NYC, NY, Atlanta, GA, Sterling Heights, MI, Washington, D.C., Rye Brook, NY, Columbia, MD, and St. Louis, MO. UHY Advisors, Inc. and its subsidiary entities have nearly 700 professionals providing services from offices throughout the United States.
UHY LLP and UHY Advisors, Inc. are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. “UHY” is the brand name for the UHY international network. For additional information, please visit their website at www.uhy-us.com.