End of
Year Tips
It’s just 2.5 weeks from the end of 2016!
We are all scurrying around with our shopping and gift buying, parties
and baking, making lists, movie watching, and listening to Christmas
music.
There’s no doubt, this time of
year can be hectic.
There’s lots to get
done, that’s for sure but there’s one more thing we must think about – the dreaded
upcoming tax season!
Considering that, The Goebel Team would like to give you some good news.
We have found some information we would like
to share with you.
Below is an article
with some year-end tips!
It's All In the Timing
Most of our tax experts' advice boiled down to one basic premise: Defer
income on your real estate as long as possible, and accelerate expenses as
quickly as possible.
"Most people have the idea that if they can get a bigger deduction now,
they'll take it and they'll worry about next year when they get there,"
says Scott Estill, a tax attorney in Denver, Colo.
That said, Estill suggests that one simple way to lighten your tax burden in
the coming year is to delay the receipt of payments on rental properties until
after the first of the year.
"If you collect rent on Jan. 1, the income from that payment won't be
taxed until next year," Estill says.
By the same token, if you make your mortgage or property tax payments early
— payments which may not be due until after the new year — your mortgage
interest deduction will be larger, or you can deduct the early tax payment from
your current-year income.
Embrace The Holiday Spirit
There are a number of holiday activities that could and should be used to
your tax advantage. Bill Bronchick, an Aurora, Colo.-based attorney and author
suggests that you go ahead and splurge on holiday celebrations; after all, if
you invite business acquaintances, the entire event may be tax deductible.
"It is certainly legitimate to take a deduction for a holiday party —
if it's primarily for business," Bronchick says. "That means you can
deduct any expense related to the party, whether that means you bought new wine
glasses for it or paid to have a cleaning person come the next day."
And as the winter holidays are a time for giving, feel free to donate to
charity any odd, old or unwanted items before the end of the year — and take a
tax deduction for it in April. Although it may not amount to significant
savings, most charities that accept donations will allow you to assess the
value of your own donation, so you are essentially determining the size of the
deduction you can take. (Remember when Bill Clinton donated his old underwear
and then took tax deductions, valuing the underwear at $2 per pair?) If you
donate real estate, you can take a larger deduction, but the size of the
deduction is determined by the market value of the property, rather than your
own assessment of its value. If you donate undeveloped land to a church, for
example, you may deem the property to be worth $60,000, but if an assessor
values it at $25,000, the size of your deduction will be $25,000 (see
"Donation Motivation").
Pay Off Your Debt
All those Americans who took advantage of 40-year-low interest rates to take
out equity loans on their homes, and who also have credit-card debt, may wish
to pay off their credit-card debt with the equity loans before the year ends.
The idea is that if you pay off your credit-card debt with your home equity
loan, you can deduct the interest on the payment; the interest on your
credit-card debt normally is not deductible, unless the expenses on your credit
card are incurred for business purposes.
Another nifty tax break, which is often overlooked, according to Estill,
applies to people who have sold their homes this year. The points paid on a
mortgage on your primary home are deductible, but they are amortized over the
life of the loan. For example, if you paid points on a 30-year mortgage, every
year you would deduct one-thirtieth of the points you paid upfront. During the
year that you sell, however, you can accelerate the amortization so that you
can deduct the remaining value of the points you paid.
"A lot of people miss this, but it could put a thousand or a couple
thousand dollars in your pocket," says Estill.
And a couple thousand dollars saved is a couple thousand earned — until the
IRS makes a grab for it the following year.
http://abcnews.go.com/Business/story?id=89886&page=1
For more, go to Forbes.com..
