Tax planning is a year-round process and these tips will help you get the most out of your Tax Return for 2017. While the year-end might be a festive season with plenty of fun with family, it is also the perfect time to look into your financials with some time off from work. Keep things upswing by itemizing your deductions and actually work towards a bigger tax refund. Interested? Read on:
  • Max your retirement contributions
No matter what profession you belong to or whether you are an employer or employee; find out the max that you can contribute to your retirement fund. It will automatically lower your taxable income. In case you do not have an account, you have time until April to set up such an account for yourself.
  • Monitor your Flexible Spending Account(FSA)
Popularly called as Flex plans, it constitutes of fringe benefits via which you can transfer part of your income for child care or medical bills. Working by the policy of ‘use it or lose it,’ it allows you to spend without paying any income or Social Security tax. The catch is that you lose the money if you do not spend the allocated amount. Allocate fund intelligently here and ensure that you use it on eligible items. You will end up saving substantially.
  • Gift liberally to charities
All your donations to charities are viewed as itemized deductions. Before the year ends, remember to donate away old clothes, furniture etc. to make your home clutter-free. This would not only make room for new presents but these ‘non-cash’ contributions would earn you tax deductions in fair market values and not their cost to you. Ensure that you get a receipt as well as proof of the condition of all your donations. The new tax rules count only those non-cash contributions which are in ‘good or better’ conditions.
  • Donate money to charity
If you can, it’s a good idea to donate money to an authentic charity. Donating before 31st December 2017 and keeping the bank records and documentation will help you get tax deductions for the contributed amount.
  • Sell your losers
Are any of your investments in your non-retirement account indicating losses? It would be a smart move to sell them as they would offset your capital gains and help you minimize your taxable income.
  • Business expenditures
December is the perfect time to buy any business equipment or supplies. This makes you eligible to get tax deductions in the current year. Increasing inventory purchases would also decrease business net income.
  • Affordable Care Act
Despite the turmoil, you still need to have health insurance to avoid a penalty (Depending on your income). You can Enroll in the Affordable care act by December 15, 2017 if you don’t have health insurance. If your health coverage does not get active by January 1st, you might pay a tax penalty in your next year’s Tax Returns. For the current year, you will get issued form 1095A from the AFA, 1095B from your Employer provided health care or a 1095C from state sponsored health care. You will need these forms for your current year Tax Return.
  • Check your eligibility for Earned Income Credit
Despite being a complex rule, it is worthwhile to delve into it. For income below $55,000 and taking into considerations your marital status, children and other such factors; you can get a tax credit of up to $6,318 and $6,444 in 2017 and 2018 respectively. This will boost your refund by a mile.
  • College Tuition Credit
Paying your upcoming semester bill of either school or college in advance will help you claim payment on the 2017 income tax return and thus save on taxes. The college should issue a 1098-T which will be required to do the Tax Return.
  • Hire a professional
Paying little fees and hiring a professional taxpayer will prove profitable as he would exhaust all ways of tax savings for which you are eligible.
With all the hard work done, go stress-free and get completely immersed in the festive spirit. After all, you do have extra money to splurge!