A new year is coming and oh how quickly. Although no one knows what tax and financial changes a Trump administration may bring, there are some time tested basics you need to remember for the new year.
Make an investment in your IRA.
You actually have until April 27, 2017 to make a contribution. This will reduce your 2016 tax bill. But as with any pre-tax savings plan your savings will grow over time via compounding re-investments without the annual tax burden. In theory, when you begin to withdraw from the plan your annual income and tax bracket will be lower so that the overall tax liability on the investment is reduced.
Make a final payment on your 2016 bill.
If you are making estimated payments during the year, you might want to check to see if the amount you have paid so far is within IRS guidelines. You have to pay either 100% of whatever the previous year’s tax bill was or 90% of what this year’s tax bill will turn out to be. So if your income is climbing, make sure you’ve paid at least what you did last year. If it is declining then you can get by with having paid 90% of what you think you will owe. You can catch up the remaining 10% when you actually file your taxes.
Work from home?
Check into taking a home office deduction. So many people work from home a significant part of the time these days it is crazy not to at least investigate claiming a home-office tax deduction. There are plenty of resources available online to help you understand which expenses are eligible and which are not. Don’t push it, but don’t forfeit the opportunity either.