Category: Individual Tax Planning
Posted: December 2016
As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill for this year and possibly the next. Factors that compound the planning challenge this year include turbulence in the stock market, overall economic insecurity, uncertainty about the new administration, and Congress's all too familiar failure to act on a number of important tax breaks that will expire at the end of 2016.
Some of these expiring tax breaks will likely be extended, but perhaps not all, and as in the past, Congress may not decide the fate of these tax breaks until the very end of 2016 (or later). For individuals, these breaks include: the exclusion for discharge of indebtedness on a principal residence; the treatment of mortgage insurance premiums as deductible qualified residence interest; the 7.5% of adjusted gross income floor beneath medical expense deductions for taxpayers age 65 or older; and the deduction for qualified tuition and related expenses. There is also a host of expiring energy provisions, including: the nonbusiness energy property credit; the residential energy property credit; the qualified fuel cell motor vehicle credit; the alternative fuel vehicle refueling property credit; the credit for 2-wheeled plug-in electric vehicles; the new energy efficient homes credit; and the hybrid solar lighting system property credit.
Higher-income earners have unique concerns to address when mapping out year-end plans. They must be wary of the 3.8% surtax on certain unearned income and the additional 0.9% Medicare (hospital insurance, or HI) tax.
Here is a list of additional actions based on current tax rules that may help you save tax dollars if you act before the end of the year. Not all actions will apply in your particular situation, but you (or a family member) will likely benefit from many of them. Feel free to contact our tax specialists at Mierendorf and Co. to discuss which of these following actions may work for your situation:
Remember, not every strategy works for every taxpayer. Contact us at Mierendorf and Co. to discuss your year-end tax strategies.
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