Message from Joseph (Yossi) Reich, CPA, TaxRevo Manager
If you listen closely, you can probably hear the sound of the tax clock winding down. (Tick, Tick…) The window is closing to cut your taxes for 2016. Here are a few smart moves you should make before year-end:
- If you think you owe state or local taxes, consider prepaying them before the end of the year in order to claim the deduction. Be aware of alternative minimum tax consequences.
Social Security beneficiaries can expect a slight increase in their Social Security check in 2017. There have also been several recent tweaks to the program that change how married couples can collect benefits. Here’s a sneak peak at the new Social Security rules for next year:
Modest increase in payments – Social Security payments will increase by 0.3 percent beginning in January. (Translation: a free cup of latte.) This cost-of-living adjustment is estimated to result in the average Social Security beneficiary receiving an extra $5 per month.
The holiday season is the peak time for charitable giving. According to CNBC, in 2015, Americans gave a record $373.25 billion to charities. (We are all so generous!)
However, last December, Congress and President Obama made permanent a tax law on qualified charitable distributions (QCDs) that allows individuals 70 ½ or older to give directly from their IRAs rather than having to take a distribution that would trigger an income-tax bill. The rule allows taxpayers to save on taxes and, as a result, give more if they wanted. Because a QCD reduces income and is not an itemized deduction, it even benefits investors who do not itemize.
TaxRevo wants to make sure that you are well prepared for financial success. As we reflect on the closing year, we should start thinking of ways to be more effective in 2017.
Save even more for retirement. Beef up your contributions to your retirement account and you can significantly improve your financial future. A few more dollars saved now can reap a very comfortable retirement down the road.
As the holiday season is in full swing, the IRS reminds us it will hold refunds until mid-February for people claiming the Earned Income Tax Credit or the Additional Child Tax Credit. In addition, new identity theft and refund fraud safeguards put in place by the IRS and the states may mean some tax returns and refunds face additional review.
''This is an important change as some of these taxpayers are used to getting an early refund," said IRS Commissioner John Koskinen. "We want people to be aware of the change for their planning purposes during the holidays. We don't want anyone caught by surprise if they get their refund a few weeks later than in previous years."
In light of the rhetoric surrounding the 2016 Presidential Election, TaxRevo offers four fun facts about the taxing of wealthy Americans:
- The richest 1% of Americans own 35% of the nation’s wealth. The bottom 80% own just 11% of the nation’s wealth.
- In the 1950s and 1960s, when the economy was booming, the wealthiest Americans paid a top income tax rate of 91%. Today, the top rate is 43.4%.
- 12 – Employers: Employees are required to report to you tips of $20 or more during November.
- 15 – Corporations: Deposit the fourth installment of your 2016 estimated tax.
- 30 – File Form 730 and pay tax on wagers accepted during November.
- 30 – File Form 2290 and pay the tax for vehicles first used during November.
Can you Believe It? Time to Prepare for Tax Season
Every year, after the High Holidays, we all vow to do things differently as we prepare for the next tax season. At TaxRevo, we are continually focused on simplifying the tax process and making it as easy as possible for you. Here are some simple steps for you to help the process (besides working with some great accountants):
- Ensure you are not underpaying your taxes by having accurate withholdings stated on your W-4. Use this time to ensure your W-4 is accurate. Check out the handy withholding calculator, courtesy of your friends at the IRS. Click here for the calculator.
There is plenty you can do to avoid running out of money in retirement, but you could be making costly mistakes now that will sabotage the comfort of your golden years. TaxRevo wants you to be aware of these missteps asap.
- Failing to plan for medical expenses – Medicare starts at age 65, but that’s not the end of your medical expenses. It is estimated that a 65-year-old couple who retired in 2014 will need $220,000 for medical expenses over the course of retirement. Look into long-term-care insurance; we can help.
- Underestimating costs – Retirement costs can be surprisingly high. You may find that hard to manage, an extra source of income could be needed. Check the Social Security Administration’s rules for working while receiving Social Security benefits.
Social Security benefits will rise slightly, by 0.3% in 2017. Social Security says the cost-of-living adjustment will add $5 to the average monthly payment for all retired workers, which is $1,355 before the raise.
(So enjoy that extra cup of coffee at Starbucks!)