Time is Running Out to Get Tax DeductionsTax Planning
Looking for ways to get a few last minute tax deductions on your 2017 return? Here are a few ideas that you can utilize before the end of the year:
Contributions to your retirement account may be tax deductible. You may contribute up to $18,000 annually to your 401(k) or 403(b) accounts and up to $5,500 to your traditional IRA. If you're over the age of 50 with a 401(k) or 403(b) through an employer, you are eligible for a catch-up contribution. This allows you to contribute an additional $6,000 to your retirement savings annually for a total of $24,000 in 2017. You're also eligible to contribute an additional $1,000 to your own traditional IRA, for a total of $6,500 this year. Contributions to your retirement accounts can be a great way to save for the future while reducing your tax liability (limitations exist).
Do you have someone in your life for whom would like to start a college savings account? 529 Plans can be opened by parents, grandparents, aunts, uncles, family friends or even the student (if over the age of 18). These savings accounts are like IRAs for college – earnings grow tax free and contributions may be tax deductible. Even better – if profits are spent on federally approved college costs, you can withdraw from the account tax-free.
Health Savings Accounts
A HSA (Health Savings Account) is a great way to help reduce your tax liability while also building savings for medical purposes. In 2017, you can contribute up to $3,400 (self-only coverage) or $6,750 (family coverage) and the money you contribute is pre-tax! Remember, the money you contribute to your HSA not only cuts your tax bill, but it also rolls over meaning that over time you can amass significant savings for unplanned medical expenses.
Don't forget to donate! Are spaces in your house full of things like clothing you haven't worn in years, toys your kids have outgrown, furniture you've been dying to get rid of? Cleaning out your closets, basement, attic, spare bedrooms, etc. and taking those items to a local donation center is a great way to get a deduction! There are also many services that will pick up your donations from your home. Just don't forget to get a receipt and catalog the items you've donated.
Donations are not limited to physical items. You can also make monetary donations to organizations or your church. Do you have a retirement account? Making a contribution from the account to a charity will reduce taxable income from your required minimum distribution.