Feel free to visit my website at http://www.davidasnydercpa.com and call me at 928-445-0104 x9 with any business or tax issues. I want to thank everyone for such a wonderful year. I hope everyone has a lucrative and fulfilling 2017. Remember if you or someone you know needs any type of tax return, an audit, review or compilation or you are about to retire or change your vocation or expand and need a business valuation; please see me so that I can do those engagement for you. Here are some basic tax tips for 2017:
1. Maximize retirement plan contributions
If your employer offers a 401(k) or other type of deferred pension plan, make every effort to contribute the maximum amount allowable — especially if your employer matches your contribution. Otherwise you are leaving money on the table that could benefit you in your retirement. Think of the employer match as an immediate 100 percent return on your money. Even if there is no match, all of the funds are tax-deferred and grow tax-free.
If your employer does not offer a retirement plan, then consider making a contribution to a traditional individual retirement account or a Roth IRA. The former potentially offers a tax deduction for the year the contribution is made, but both offer tax-deferred gains. Pay yourself first!!
2. Adjust your withholding
Check your year-to-date withholding and consider changing the taxes withheld if you are expecting a large refund. Try to get in the breakeven range so you are not paying too much in or have to pay too much at April 17, 2017.
This is especially important if you are claiming the earned income tax credit, or EITC, or the additional child tax credit. Why? The IRS is now required by law to hold all refunds on those returns until Feb. 15. The new law was put into place to allow the agency additional time to detect and prevent tax fraud.
3. Protect your identity
Speaking of tax fraud, if you received an Identity Protection PIN, or IP PIN, in the past, then you must provide this number on your tax return not only this year but on all future tax returns. An IP PIN is a six-digit number assigned to eligible taxpayers that helps prevent fraudulent returns from being filed under your Social Security number. Remember, the IP PIN is your friend in getting the IRS to accept your tax return. However, this is no ordinary IP PIN, as it changes every year. You read that correctly: every year! If you do not receive the notification in the mail, you will need to go to the IRS website to retrieve it.
4. Get what’s yours
According to the IRS, one out of every five workers fails to claim the very valuable earned income tax credit. If you worked and earned less than $53,505 in 2016 (the limit will be $53,930 in 2017), then use the EITC Assistant tool to determine if you qualify for the credit. You must file a return in order to receive the credit. Don’t miss out on this!
5. Declutter and reap a tax break
If one of your New Year’s resolutions is to simplify and declutter your life, now is the time to get going. You can make money by donating all of those things you no longer need or want in your life. There are many charitable organizations that accept items other than cash such as clothing, books, electronics and other household items. The deduction is limited to the item’s fair market value, and the items must be in good condition or better to be deductible. If the value of the noncash items is more than $500, then you must file Form 8283, Noncash Charitable Contributions, and fill it in with some details. But it is well worth the effort.
Keep in mind about the 5 Arizona Tax Credits, including the Charitable Organization (used to be called Working Poor) Tax Credit, Arizona Military Family Relief Fund (do this early because of the $1 million cap – so November is too late), Public School Tax Credit, School Tuition Tax Credit (usually private schools), and the Foster Care Tax Credit. Please contact me with any questions on these tax credits and/or listen to me on the radio periodically.
6. Cash in on scholarly tax breaks
If you, your spouse or dependents had higher education costs in 2016, there may be some tax savings for you.
Basically there are three different benefits: the American opportunity credit, the lifetime learning credit and the tuition and fees deduction. There are various requirements that may limit the benefit, but the IRS once again offers a useful tool: the Interactive Tax Assistant tool to help you find your way through the maze. You should receive Form 1098-T, Tuition Statement, from your school with the information required by the IRS to complete Form 8863, Education Credits.
7. Get health coverage in order
Make sure you know what you need to report to the IRS on your health insurance. The shared responsibility provision requires that you and your family have minimum essential coverage or qualify for a health coverage exemption. Otherwise, you must make an individual shared responsibility payment for all months that you didn’t have coverage or an exemption. Most taxpayers just need to do one thing: Check the box that indicates you had health care coverage for all of 2016. If that is not the case or you received advance payments of the premium tax credit on the marketplace, then you may need to fill out Form 8965, Health Coverage Exemptions, and Form 8962, Premium Tax Credit, to complete your tax return.
8. Be generous without tax repercussions
Every so many years, the IRS changes the annual exclusion for gifts that you can give without having to file a gift tax return. If you gave more than $14,000 in cash, property or gifts to anyone, you must report the gift on Form 709. If you are married, you can give a combined $28,000 and remain under the radar.
9. Be smart when you file
When filing your return, the quickest and easiest way to receive your refund is to electronically file your return and use direct deposit. If you owe money, use IRS direct pay from your checking or savings account. And whatever else you do, please make sure you keep a copy of your filed tax return. Believe me, it saves so much trouble in so many ways in the event you do happen to need it.
If you need further information on these tax tips, please call me at 928-445-01014 x9 or contact me at firstname.lastname@example.org.
David A. Snyder CPA, PLLC www.davidasnydercpa.com
325 Montezuma Street, Prescott, AZ 86303 (928)445-0104 Ext. 9
Fax (928) 717-1076 email@example.com