It’s already fall and before you know it, another year will be upon us. It’s never too early to plan ahead to minimize your tax bill. An experienced and knowledgeable tax professional can help any individual or business make the right year-end savings moves with important advice and assistance. Here is the first part of a two part series on some things to ponder when considering potential tax moves between now and the end of 2016:
- Make time to plan
To sufficiently and effectively plan ahead to save taxes requires that a taxpayer or taxpaying business correctly assesses and understands its current tax situation, as well as some foresight regarding whether current circumstances will change or stay the same in 2017.
- Consider carefully any year-end investment decisions
It makes sense to consider the tax implications of any year-end investment moves. Any realized net capital gains may be reduced by any losses over and above the amount of gains. These losses may be used to offset up to $3,000 of ordinary income ($1,500 if your filing status is married filing separately) or carried forward to reduce taxes in future tax years.
- Account for the net investment income tax
Taxpayers often forget about the 3.8% net investment income tax. This additional tax may apply to some or all of net investment income if modified AGI exceeds $200,000 ($250,000 if married filing jointly, $125,000 if married filing separately, $200,000 if head of household).
- Defer income to 2017
Taxpayers should consider ways to defer income to 2017, particularly if they are dropping to a lower tax bracket at this time. Delaying the collection of business debts, rents, and payments for services may prove money-saving next year by postponing the payment of tax on the income until 2017.
- Increase withholding to account for a tax shortfall
For taxpayers likely to pay taxes, or who may be subject to an estimated tax penalty, requesting an employer to increase withholding taxes for the remainder of the year to account for a shortfall may be a very wise move. Because withholding tax is considered as having been paid evenly through the year instead of when the dollars are actually taken from a paycheck, taxpayers have the ability to make up for low or missed quarterly estimated tax payments.
If you are an individual or business in the New York or Tri-State area and have any question about taxes, especially in planning ahead for the next filing season, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation call 212-490-0704.
