The tax season cometh!
From dependents to deductibles, figuring out how to save money on taxes can be a yearly challenge. Here are a few tips from Kelly Taylor, CPA, for getting the most you can out of your 2016 tax season.
1. Open a Health Savings Account (HSA)
HSA’s work just like a savings account with a checkbook and/or debit card. Most banks or investment advisors can help you set this up. You receive an instant deduction when contributions are made. For 2016, this applies to any amount up to $6,750 for a family or $3,350 for an individual.
2. The Advanced (Alternative) Energy Credit
This credit is available to real estate owners through 2020. Participants receive a credit of 30% of any solar, geothermal, wind or other alternative energy option. This results in savings upon installation and creates yearly energy savings. The credit is available for both residential and commercial property. After 2020 the amount of the credit will decrease but will remain in effect until 2022 unless extended.
3. Deductions For Advisory Fees
Many frequently overlook deductions on fees to investment or retirement plan advisors. If you work with more than one company, be sure to give the total for the year to your tax preparer.
4. Funding Education through ROTH IRA’s
An alternative to 529 plans, ROTH IRAs are a great way to fund you child’s education. Each year you can contribute up to the amount of earned income they have in a given year. All contributions held 5 years or more can be distributed tax free for higher education costs.
5. Unreimbursed Employee Expenses
This tax break opportunity is often overlooked. You can’t deduct commuting costs, but if you travel to satellite offices or drive your own vehicle for business and aren’t reimbursed (or only partially), you can deduct mileage costs. You may be eligible for reimbursement for other items also such as home office, education or license fees, etc.
6. Itemize Your Expenses
Taxpayers that itemize will be able to deduct State and Local Sales Tax instead of withholdings tax if it is more beneficial. Remember: if you purchase large ticket items such as automobiles, let your tax professional know how much sales tax you paid and to determine which deduction will benefit you most!
7. Deduct Student Loan Interest
If you are an adult child who is not claimed as a dependent by your parents, you can save money on student loan deductibles. Even if your parents pay back your student loans, the IRS assumes the money was given to the child, who then repaid the debt. Thus, the young adult child can deduct up to $2,500 of student loan interest paid by his or her parents.
Make sure to contact Kelly for questions and concerns about 2016 tax returns! Check back with Dani Beyer Real Estate for more useful tips, tools and information!