Feel free to visit my website at http://www.davidasnydercpa.com and call me at 928-445-0104 x9 with any business or tax issues. I offer a superior spectrum of business oriented services, including tax preparation, business valuations, financial statements, IRS representation, strategic planning, tax advice, professional controllership, and much, much more. Contact me to find out what I can do for you. Here are couple tips for 2016:
1. This isn't a tax deduction, but it is an important subtraction that can save you a bundle. And this is the one that former IRS commissioner Fred Goldberg says that millions of taxpayers miss . . . costing them millions in overpaid taxes. If, like most investors, you have mutual fund dividends automatically used to buy extra shares, remember that each reinvestment increases your tax basis in the fund. That reduces the taxable capital gain (or increases the tax-saving loss) when you redeem shares. Forgetting to include reinvested dividends in your basis results in double taxation of the dividends—once in the year when they were paid out and immediately reinvested and later when they're included in the proceeds of the sale. If you're not sure what your basis is, ask the fund for help. Funds often report to investors the tax basis of shares redeemed during the year. In fact, for the sale of shares purchased in 2012 and later years, funds must report the basis to investors and to the IRS.
2. Little things add up, too, and you can write off out-of-pocket costs incurred while doing work for a charity. For example, ingredients for casseroles you prepare for a nonprofit organization's soup kitchen and stamps you buy for a school's fund-raising mailing count as charitable contributions. Keep your receipts. If your contribution totals more than $250, you'll also need an acknowledgement from the charity documenting the support you provided. If you drove your car for charity in 2015, remember to deduct 14 cents per mile, plus parking and tolls paid, in your philanthropic journeys.
3. Although job-hunting expenses are not deductible when looking for your first job, moving expenses to get to that job are. And you get this write-off even if you don't itemize. To qualify for the deduction, your first job must be at least 50 miles away from your old home. If you qualify, you can deduct the cost of getting yourself and your household goods to the new area. If you drove your own car on a 2015 move, deduct 23 cents a mile, plus what you paid for parking and tolls.
4. Folks who continue to run their own businesses after qualifying for Medicare can deduct the premiums they pay for Medicare Part B and Medicare Part D, plus the cost of supplemental Medicare (medigap) policies or the cost of a Medicare Advantage plan. This deduction is available whether or not you itemize and is not subject to the 7.5% of AGI test that applies to itemized medical expenses for those age 65 and older. One caveat: You can't claim this deduction if you are eligible to be covered under an employer-subsidized health plan offered by either your employer (if you have a job as well as your business) or your spouse's employer (if he or she has a job that offers family medical coverage).
5. The American Opportunity Tax Credit offers a credit of to as much as $2,500 per student off your tax bill, in case you paid for entitled college costs for yourself, your partner, or your dependent. There’s also the Lifetime Learning Credit that gives a credit of a maximum $2,000 per tax return for graduate education and continuing learning.
6. An element of the misunderstanding here is that almost every year, Congress eliminates or limits this deduction, and then brings it back right before the next year commences.
Nevertheless it is possible to get a credit of 10% of the amount to a maximum of $500 for windows, doors, insulation, roofs, non-solar water heaters, air conditioning and heating. Additionally you can take a credit as high as 30% of the expense of putting in authorized residential alternative energy devices, like solar power hot water heating units, wind generators, and geothermal heat pumps.
David A. Snyder CPA, PLLC
325 Montezuma Street, Prescott, AZ 86303 (928)445-0104 Ext. 9
Fax (928) 717-1076