We are just a few months removed from the end of the 2016 tax season, so it might feel like it’s a little early to start thinking about taxes for 2017. The reality is that it’s never too early to consider the tax implications faced by your business. By planning ahead, you stand to save more in deductions and avoid potential financial messes.
Here are a few tips from our tax service in Jamestown, ND to help you get off on the right foot far in advance of the 2017 tax season:
- Contribute to your retirement plan: You can reduce the amount of taxable income you have by contributing instead to your employer retirement plan, such as a 401(k) or 403(b). Not only does this lessen your tax blow, but it also helps you to get better at saving for many years down the road.
- Know your various limits: There are a number of tax deductions and credits that no longer apply when your adjusted gross income surpasses a certain limit. So before you start counting on these deductions as part of your planning for next year, you should make sure you are familiar with those limits and know whether you are in danger of surpassing them. This could be the case for benefits such as a child tax credit, Hope and Lifetime Learning credits, college tuition, student loan interest, deductible medical expenses and many other itemized deductions.
- Pay property taxes this year: If you pay off property taxes before December 31, you are able to take out bigger deductions on your 2017 tax return. This is also true if you make January mortgage payments before the end of the year, as you will then be able to deduct interest on your tax return. Also, this is not only important to note for homeowners, but also for business owners who also own a brick and mortar location.
- Organize your receipts: Any receipts that could potentially earn you deductions should be saved and kept organized as well as possible so you can use them when tax season comes around. This is especially true for charitable donations and gifts.
- Don’t get trapped with more tax responsibility than necessary: You should try to avoid buying mutual fund shares in accounts that are not IRAs if the distribution date for the fund is coming up. Most funds will hold onto dividends and gains and pass them out once December hits. If you buy right before these funds are distributed, you will pay taxes on any gains you did not participate in that year.
- Consider selling investments: Even if you might have to take a loss, it could be better in the grand scheme of things to offload these investments now. Beware the sunk cost fallacy!
Hiring a tax service in Jamestown, ND can help you stay organized and get you the best outcomes this coming tax season. Contact us today at Craig S. Hanson, CPA for more information.