Questions About Individual Taxes? We Have the Answers.

Have You Ever Asked Yourself How Can I Save on My Taxes?

Tax-Saving Idea #1:  Minimize Your Income

Harvest Capital Losses. Review your securities portfolio for any losses that can be realized before the end of the year to offset gains that have been previously recognized during 2017. Keep in mind that if you sell at security at loss, you have to wait at least 31 days to buy it back in order to avoid wash sale rules.

Postpone Income Until 2018. If you can defer transactions until 2018, you may be able to claim larger deductions, credits, and other tax breaks for 2017 that are phased out for individuals with higher adjusted gross income (AGI). These include child tax credits, higher education tax credits, and deductions for student loan interest. Additionally, it may be advantageous to try to arrange with your employer to defer, until 2018, a bonus that may be coming your way.

Tax-Saving Idea #2: Increase Your Deductions

Make Charitable Gifts of Appreciated Stock. If you have appreciated stock (or mutual fund shares) that you’ve held more than a year and you plan to make significant charitable contributions before year-end, consider keeping your cash and donating the stock instead. You’ll avoid paying tax on the appreciation, but will still be able to deduct the donated property’s full value. If you want to maintain a position in the donated securities, you can immediately buy back a like number of shares.

However, if the stock is now worth less than when you acquired it, sell the stock, take the loss, and then give the cash to the charity. If you give the stock to the charity, your charitable deduction will equal the stock’s current depressed value and no capital loss will be available. However, if you sell the stock at a loss, you have to wait 31 days to buy it back. Otherwise, you will trigger the wash sale rules, which means your loss won’t be deductible, but instead will be added to the basis in the new shares.

Don’t Lose a Charitable Deduction for Lack of Paperwork. Charitable contributions are only deductible if you have proper documentation. For cash contributions of less than $250, this means you must have either a bank record that supports the donation (such as a cancelled check or credit card receipt) or a written statement from the charity that meets tax law requirements. For cash donations of $250 or more, a bank record is not enough. You must obtain, by the time your tax return is filed, a charity-provided statement that shows the amount of the donation and lists any significant goods or services received in return for the donation (other than intangible religious benefits) or specifically states that you received no goods or services from the charity. Donations of personal property (or a group of similar items) valued at over $5,000 require a “qualified appraisal” and special reporting in your tax return.

Pay Deductible Expenses with Credit Card Before Year End. Doing so will increase your 2017 deductions even if you don’t pay your credit card bill until after the end of the year.

Have You Ever Asked Yourself What Should I Know About Retirement Planning?

Retirement Planning Strategies

Convert IRA TO ROTH IRA. If you believe a Roth IRA is better than a traditional IRA, consider converting traditional-IRA money invested in beaten-down stocks (or mutual funds) into a Roth IRA if eligible to do so. Keep in mind, however, that such a conversion will increase your AGI for 2017.

Recharacterize Previous ROTH Conversions. If you converted assets in a traditional IRA to a Roth IRA earlier in the year and the assets in the Roth IRA account declined in value, you could wind up paying a higher tax than is necessary if you leave things as is. You can back out of the transaction by recharacterizing the conversion—that is, by transferring the converted amount (plus earnings, or minus losses) from the Roth IRA back to a traditional IRA via a trustee-to-trustee transfer. You can later reconvert to a Roth IRA.

Make Sure That You Take RMD If Necessary. The first Required Minimum Distribution needs to be taken from retirement funds by April 1 of the year following the calendar year in which you reach age 70½. All subsequent RMDs must be taken by Dec. 31st of future years.

Have You Ever Asked Yourself What Should I Know About Health Insurance?

Health Insurance Strategies

Use Flexible Spending Account Funds. Participants in a Flexible Spending Account (FSA) can only carry over up to $500 of their unused balance remaining at the end of the year. Consult your company’s benefits policy regarding the ability to carryover unused funds. Funds not used or eligible for carryover will be forfeited.

Make Sure You Have Adequate Health Insurance Coverage. If you and your family do not have adequate medical coverage (referred to as minimum essential coverage), you may be subject to a penalty. Medical insurance provided by your employer or through an individual plan purchased through a state insurance marketplace generally qualifies for adequate coverage. The penalty amount varies based on the number of uninsured members of your household and your household income. If you have three or more uninsured household members, the penalty may be $975 or more for 2015 ($2,085 or more for 2016), depending on your household income.