As 2016 comes to an end, it is time to start thinking about your annual income tax filing. You want to take advantage of all available deductions, find legal ways to reduce your taxes, and avoid anything that could trigger tax penalties. A Virginia tax attorney can help you to make smart choices when it comes to completing year-end tasks related to taxes. Contact an attorney for help, as some of the actions that you should be taking are time sensitive and you do not want to lose out on chances to reduce your tax bill.
Consider These Tips
Some of the key tips you should follow as the year comes to an end include the following:
- Make the maximum contributions to your IRA, or take required withdrawals if you are 70 ½ or older:
Investing in an Individual Retirement Account (IRA) gives you a tax break to help you save for retirement. Depending upon your family income and whether you or your spouse have a retirement plan through work, maximum contributions to IRAs are capped each year. As of both 2016 and 2017, most investors are allowed to contribute up to $5,500 with pre-tax funds to a traditional IRA. For those who are 50 or older, an additional $1,000 is permitted as a catch up contribution.
You have to make your contributions by April for 2016, and may want to start making monthly contributions now for 2017 so you are not scrambling at the end of the year to put aside money in your tax-advantaged retirement account.
If you are 70 ½ or older, your concern is not with investing in an IRA, but instead is with complying with rules for required withdrawals from retirement accounts. Your account balance and age will determine how much you're required to take out of your account.
- Make your charitable donations:
Charitable donations not only allow you to do good work, but also provide you with a tax deduction. If you want to give money to support a cause that you believe in, you have to give the gift during the calendar year in which you take the deduction. You also have to make certain that the organization you are providing funds to actually has the right status to make your contribution tax deductible.
- Get all of your paperwork together
You need to start getting your tax paperwork in order as soon as possible so you can complete your return on time. You may want to make separate folders for each different kind of documentation you will require for different categories of deductions, like child care costs or charitable contributions. Having your paperwork organized helps you maximize deductions and allows you to ensure you can back up your claimed deductions if the IRS audits you.
There may be many additional things that you need to do to comply with your tax obligations and to reduce your tax bill. Contact attorney Kevin Thorn today to find out how you can make certain that you accomplish essential year-end tax tasks.
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