Oh, no, I owe tax! Is there anything I can do now? So 2016 is over, and tax planning is much more effective if done before the end of the year. But before you give up entirely, here are a few ideas that you can still do that might help your 2016 tax situation.
- Contribute to College Savings Iowa accounts. You have until the due date of the Iowa return, which is May 1, 2017, to make a contribution and still take the deduction on your 2016 Iowa tax return. The maximum contribution is $3,188 per beneficiary account. So if you have 2 children and both you and your spouse want to contribute the maximum, that is a tax deduction on Iowa of $12,752! What a boost to your kids’ college savings! This only reduces your Iowa tax bill, but it still gives you up to an 8.98% tax savings. And grandparents, aunts, uncles, even friends, this works for you, also! It doesn’t have to be your child, but the account has to be set up in your name with the beneficiary that you name being the one that can use the funds.
- Contribute to your IRA. You have until April 18th to make your IRA contribution. The maximum contribution is $5,500 per person, and if you are over the age of 50, you can add an additional $1,000. After you decide if you want to make a traditional IRA contribution or a ROTH IRA contribution, it’s a good idea to review the qualifications to be sure you are eligible to make the contribution and if it is tax deductible for you.
- Contribute to your Health Saving Plan. You also have until April 18th to make your HSA contribution, but the plan has to have been set up before the end of the year. The maximum contribution is $3,350 for self only or $6,750 if family coverage. There is an additional $1,000 contribution allowed for those over 55 years of age.
- Get organized. By organizing your documents, you can make sure you have included all the business and tax deductions that are allowed. Be thorough: look at all banking accounts as well as credit card statements to make sure you are including all items. Did you know that you can deduct credit card expenses even if you have not paid the credit card bill before the end of the year? Also, don’t forget your mileage log.
- Ask questions. If you have doubts about what is deductible, ask your tax advisor so that all deductible items are included. If your tax advisor sends out a list of questions with your tax organizer, be sure to read through them to see what questions might apply to your particular situation.
These are just a few ideas that might still help you. And remember… “Better late than never!”
A little more about us:
Located in West Des Moines, Iowa with a branch office in Winterset, Iowa, McGowen, Hurst, Clark & Smith, P.C. celebrates 65 years of extending excellent service to our clients, providing them with accounting, auditing, consulting and investment expertise.
Established in 1946, our staff has grown from 3 to 60 employees, making us large enough to provide our clients with a broad base of experience and resources, yet small enough to offer very personalized service—which we feel makes us stand apart from other CPA firms. In addition to the traditional services of Accounting, Tax Preparation, Audit and Business Consulting, MHC&S offers our clients specialized services including Estate Planning, Business Valuations, Cost Segregation Studies, Retirement Planning, QuickBooks Training, Financial Advisory Services, Fraud Detection and Deterrence, Business Succession Planning, Litigation Support and more.
MHC&S is a member of CPAmerica International, Inc., a national association of accounting firms offering membership to only 90 firms throughout the United States. This association offers a wide pool of additional technical expertise to the members firms, as well as continuing professional education necessary to maintain the degree of excellence which MHC&S feels is vital in today’s business environment.