It can be really confusing at tax time. But one of the best things this year is that you have a few extra days in which to file your return. All citizen’s Income Taxes must be filed by Tuesday, April 18th because the 15th falls on a Saturday, and the 17th is a holiday in Washington DC. So because of this, you get an extra two days to complete and file your taxes, but the earlier you file the better, because early filing helps thwart identity thieves.
Some important things to either consider or remember as you are filling your returns, according to Kiplinger’s Sandra Block, are first, “If you use the same tax software you used last year, that shouldn’t be a problem. The program will automatically transfer information from last year’s return. If you switch to a new program or use one for the first time, you’ll need to check your 2015 tax form in order to e-file. (It’s always a good idea to have last year’s tax return on hand when preparing your return, whether or not you e-file.) If you misplaced your return, you can find last year’s Adjusted Gross Income (AGI) with the IRS’s “Get Transcript” tool (www.irs.gov/individuals/get-transcript).”
Another tip from Ms. Block deals with clarification on approved ways to lower your taxes – even now – by contributing to your existing IRA retirement savings account. According to Ms. Block, “your IRA deduction is ‘above the line,’ which means you can claim it even if you don’t itemize deductions. It will reduce your adjusted gross income on a dollar-for-dollar basis, which could also make you eligible for other tax breaks that are tied to AGI.”
Were you a self-employed person (SEP) in 2016? Again, according to Ms. Block, “If you earned self-employment income last year, you have an even greater opportunity to lower your tax bill. For 2016, you can contribute up to 20% of your net self-employment income (business income minus half of your self-employment tax) to a SEP-IRA, up to a maximum of $53,000. You have until April 18 (or October 17 if you file for an extension) to set up and fund a SEP-IRA.”
Other tips recommend to reduce your taxes include the funding of a Health Savings Account. There are many requirements and deadlines to doing this – the most restrictive being the December 1 deadline for opening a HSA. However, as with contributions to a deductible IRA or SEP, money you invest in a health savings account will reduce your AGI dollar for dollar.
Another two things you may want to look into before filing, is the possibility of claiming tax credits for tuition payments, and also reconciling tax credit claims on your health insurance under the ACA, or as it is most commonly referred to as “Obamacare.” The latter requires a Form 1095-A available online at healthcare.gov.
IRS Tax Tips
U.S. Internal Revue Service, March 27, 2017
Tax Time Guide: IRS Publication 17 Helps with 2016 Taxes
U.S. Internal Revue Service, March 2, 2017
Last Minute Tax Tips to Lower Your 2016 Tax Bill
by Sandra Block, Kiplinger.com, April 2017
Countdown to Tax Day: Wallethub’s 2017 Expert Tips
by John Keirnan, Wallethub.com, March 14, 2017
Tax Savings Tips & Planning Strategies
blogs.hrblock.com, March 24, 2017
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