Today TaxMama® wants to remind you about last-minute steps to take before 2016 ends.
Dear Friends and Family,
The Electoral College has confirmed our new president-elect. So we can expect some changes next year. You can view an outline of what to expect next year, here.
For now, we still need to take care of some of the routine things. Here are some quick steps:
- Make your charitable contributions before year end. Note: Remember to look up the charity to see what they do with your donations. The Foundation Center is a good source of information. For instance, the president of the Salvation Army receives no compensation (see page 7). While the president of Goodwill Industries is receives over $700,000 in compensation (see page 73).
- Clean out your closets and make a list of all the things you are taking to your favorite thrift shop.
- Make your final cash contributions.
- If you are age 70 ½ or older, remember to draw your Requirement Minimum Distribution (RMD) from your retirement accounts. There are substantial penalties if you don’t draw the money in time.
- You are entitled to draw up to $100,000 from your retirement account and transfer it directly to your charity.
- This would make it possible to take your RMD without paying taxes on the amount. But you won’t get a deduction for the contribution.
- Folks with too much money in their IRAs or retirement plans should consider transferring the funds to their Roth IRAs, or cashing some of the money out. Do some computations to see how much you can transfer at your lowest possible tax rate.
- Balance out your brokerage accounts. Are there any gains or losses you can harvest?
- And are you in a low enough tax bracket that your capital gains will be taxed at 0% or 15%?
- Prepay certain routine bills.
- Pay your January mortgage payment late in December – so your payment covers most of the month’s accrued interest expense.
- Pay your full property taxes, not just half.
- If you owe state taxes, make your 4th quarter payment in December.
- Folks who are in business or use employee business deductions:
- Delay your invoicing until January, so you can move income into next year. (No constructive receipt)
- Make your major equipment purchases before the end of the year.
- Prepay January’s expenses, dues, etc. before the end of December.
- SSNs and ITINs – make sure that you have ID numbers for all eligible people in your household BEFORE filing your 2016 tax returns. Without them, you stand to lose tax credits and tax benefits.
- Health insurance, get insurance in place for all household members for 2016. Penalties are high without coverage. Don’t count on Obamacare to disappear for 2017.
For much more detail, tax professionals can sign up for the CPE Link Tax Update workshops – discount still good until December 30. Everyone else, drop by my column at MarketWatch.com and the TaxWatch columns.
To make comments and toss in your own ideas, please drop into the TaxQuips Forum.
And remember, you can find answers to all kinds of questions about changes in the tax laws and other tax and business issues, free. Where? Where else? At www.TaxMama.com.
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