If you want to pay lower for 2017 than the current year, you need to make some smart financial moves to ensure maximum deductions for 2016.
According to an income tax specialist, it would be wise to delay taking certain income until next year if you’re confident enough that you can control the timing of that income like a payment from a client or a bonus.
But you must remember that election of Trump and the Republican Congress doesn’t ensure lower tax for the coming year. So don’t make any move based on your assumption.
For example, don’t sell any property or investment just for tax reason while holding it would be more sensible than tax purpose.
Here are some good and effective tax changes to help you curtail your tax burden this year though a certified tax specialist can show you many more effective ways of tax changes.
- Eliminate extras from the closet – Give furniture, clothes or even your cars, if possible, to charity for getting deduction. Make sure the organization is IRS recognized; don’t forget to get a receipt or any other document stating that you’ve donated the item/items and that too for a reasonable value.
- Give investment to charity – Give mutual funds, stocks or other investments rather than hard cash to the charitable trust including church. Such investments are more countable than cash as none of you and the organization has to pay any tax for capital gains. Elderly citizens over 70 ½ can disburse to such an organization directly from their retirement account. Gift from IRAs gets counted toward withdrawals that IRS makes people to take from their IRA at the time of retirement and it does so without generating any tax on that income.
- Make your move – If you’re going to move soon owing to your new job and if it possible to be done in next couple of weeks, you’ll be eligible to deduct the moving expense on the next tax return. However, you have to move to a minimum of 50 miles closer to your new job than that of your old residence. Also, you must be a full-time employee of the new company.
- Go for a new job – If you’re interested in a new job, you can get a deduction of the expense for the job hunt. From printing resume to traveling to another place for interview (unless you’re going to get traveling allowance) – you can get deduction for everything. Nevertheless, it has to surpass 2% of you AGI.
Pay for college – If you or your child is in a trade school or a college, you’re eligible to get a credit of up to 2500 USD per student for the present year. So pay your college fees before the year ending to qualify for 2016. You can claim your credit again in the coming year if the individual is still studying in the college.
These are just some of many useful ways to cut back on your tax for the current year though talking to a tax services specialist for a better guidance is always recommended.
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Author Guest Post:
Sam is a financial writer with adept knowledge on the contemporary financial issues. He contributes his posts to various financial sites, participates in forums and communities and loves to share his knowledge. Currently, he is specializing in online tax preparation since Americans seem to be lagging behind in this periphery.