The count down is on…
I’m not talking about how many days until New Year’s Day; I’m talking about how many tax days are left in the year. Wow, fun stuff!
Here are a few things to be thinking about as you round out the last tax month of the year:
- Income items – is it better for you from a tax-standpoint to accelerate income into 2016 or delay it into 2017? For employees, you don’t have much choice, but for business owners, you may. Talk with your tax accountant to see what options you may have and what may be most beneficial.
- IRA and HSA contributions – ok, you actually have a whole lot longer to think about these items as the code gives you until April 15th to round out the contributions but make sure you are planning to have the cash available to fully fund these important accounts. Even if you participate in a retirement plan, you can still make nondeductible IRA contributions. Make sure you are fully funding your retirement accounts first and then discuss with your tax accountant to determine if this would make sense for you.
- Charitable gifts – This one does have a hard deadline of 12/31 so determine what giving you want to do and then plan accordingly. Ask your investment advisor if it makes sense to give appreciated stocks in lieu of cash. You can then replenish the gift with the cash, saving capital gains taxes and allowing the advisor to rebalance the account without selling securities that may be at a gain.
- Charitable gifts of household items – Now is the time to clear out the closets, the drawers, and the cupboards of all the items that don’t fit, that you don’t like, and that you don’t use. The Goodwills, Must Ministries, Hope Houses, and many other organizations rely on your household goods to survive. Here’s a few tips:
- Make a list of all the items; you can group them for convenience.
- Price it based on the thrift store value. (Goodwill has one at https://goodwillnne.org/donate/donation-value-guide/)
- If the total value exceeds $500, you will need a lot more documentation for tax purposes so consider dividing up your donations for different charities.
- Vietnam Veterans – I gave all my boys clothes and shoes to them.
- Hope House (domestic violence shelters) – I gave my everyday women’s clothing to them.
- Drake Closet (consignment shop which supports The Drake House – transitional living for homeless women and their children) – I gave my dressy, business clothes to them.
- Goodwill or Must Ministries – I gave my household dishes, small appliances, etc. to them.
- American Kidney – I gave any furniture to them as they pick up. (Nspire, Hope House and the Vietnam Vets pick up as well as many others.)
- Keep all your receipts, the list of items and the pricing with your tax items.
- Bask in the admiration that your tax accountant will have when you give him/her this information at tax time!
- Review your 2015 tax return – Look at other items that impacted last year’s return and see what you have some control over for this year. If you need to make estimated tax payments, talk with your tax accountant to see if you should pay the state tax payment in December or January. Discuss any other items that you have questions about.
With tax-planning firmly in place, you are officially ready to bring in the New Year!
To your financial (and tax) success!
