Your 2016 Income Taxes
12-14-2016, 06:17 PM
#1
Thread Starter
Your 2016 Income Taxes
We are very near the end of the year. This is your last chance to do some of the things that could save you some income tax.
Now is the time to review your portfolio. If you have some stocks that are held at a loss you might want to consider selling them to take advantage of the loss. Keep in mind, however, if you sell the stock at a loss but buy it back within 30 days it is considered a wash sale and the loss is not available. If you have losses in the excess of gains you can deduct up to $3,000 per year against ordinary income. Any loss that cannot be deducted can be carried forward to future years when you can use them.
This is also a good time to go through your closets, garage, basement and attic to find all of the items that you no longer care for in order to donate them to charity. You must get a receipt for your donations, and in the case of clothing it is best to use the Salvation Army's valuation schedules (available on line) to value your donations. Unlike what many taxpayers think, clothing does not get more valuable after you wear it. And your donation should not be valued at what you paid for it. Keep good records, and photograph items that you are donating. If you donate items in the excess of $500 cumulatively you have to list them on form 8283. Also any individual item valued at more than $5,000 needs to be accompanied by an appraisal. Donated autos need to be accompanied by a special form provided by the charity accepting the auto. All charitable donations that you want to take on your 2016 tax return must be made by 12/31/16. All cash donations must also be made by 12/31/16. You should receive a letter from the charity detailing the value of the donation and whether or not any goods or services were received in exchange for the donation.
This is also the time to consider paying your balances for medical treatment. For example, if you are halfway through a root canal, you might consider paying the endodontist in full before the end of the year even if the procedure is not complete. Any payments made before 12/31/16 will count towards your medical deduction for the year. Unfortunately, for this to be of any use, your medical amount must be in the excess of 10% of your AGI (or 7 1/2% if you are over 65 years old) for you to get any benefit. If you are paying for health insurance, dental insurance, vision insurance or long term care insurance you can use these payment towards your medical deduction (unless these payments are pretax payroll deductions).
Now is a good time to start to get your papers in order. Accountants love it when we get client paper early and organized. It gives us the time to do the best possible job. If you do your own taxes an early organized approach will give you the time to get it done properly without the last minute pressure.
Now is also a good time to touch base with your accountant/CPA. We are not extremely busy right now, and a phone call does wonders.
Finally, if your taxes are more complicated than just a W-2 it probably pays to work with a qualified tax preparer, an accountant or a CPA. I am biased towards CPAs, but regardless of the level, it usually pays to work with a tax professional.
Good luck with your taxes.
Any information in this post or any that follow may or may not apply to you. Please consult with your tax professional before making any decision.
Now is the time to review your portfolio. If you have some stocks that are held at a loss you might want to consider selling them to take advantage of the loss. Keep in mind, however, if you sell the stock at a loss but buy it back within 30 days it is considered a wash sale and the loss is not available. If you have losses in the excess of gains you can deduct up to $3,000 per year against ordinary income. Any loss that cannot be deducted can be carried forward to future years when you can use them.
This is also a good time to go through your closets, garage, basement and attic to find all of the items that you no longer care for in order to donate them to charity. You must get a receipt for your donations, and in the case of clothing it is best to use the Salvation Army's valuation schedules (available on line) to value your donations. Unlike what many taxpayers think, clothing does not get more valuable after you wear it. And your donation should not be valued at what you paid for it. Keep good records, and photograph items that you are donating. If you donate items in the excess of $500 cumulatively you have to list them on form 8283. Also any individual item valued at more than $5,000 needs to be accompanied by an appraisal. Donated autos need to be accompanied by a special form provided by the charity accepting the auto. All charitable donations that you want to take on your 2016 tax return must be made by 12/31/16. All cash donations must also be made by 12/31/16. You should receive a letter from the charity detailing the value of the donation and whether or not any goods or services were received in exchange for the donation.
This is also the time to consider paying your balances for medical treatment. For example, if you are halfway through a root canal, you might consider paying the endodontist in full before the end of the year even if the procedure is not complete. Any payments made before 12/31/16 will count towards your medical deduction for the year. Unfortunately, for this to be of any use, your medical amount must be in the excess of 10% of your AGI (or 7 1/2% if you are over 65 years old) for you to get any benefit. If you are paying for health insurance, dental insurance, vision insurance or long term care insurance you can use these payment towards your medical deduction (unless these payments are pretax payroll deductions).
Now is a good time to start to get your papers in order. Accountants love it when we get client paper early and organized. It gives us the time to do the best possible job. If you do your own taxes an early organized approach will give you the time to get it done properly without the last minute pressure.
Now is also a good time to touch base with your accountant/CPA. We are not extremely busy right now, and a phone call does wonders.
Finally, if your taxes are more complicated than just a W-2 it probably pays to work with a qualified tax preparer, an accountant or a CPA. I am biased towards CPAs, but regardless of the level, it usually pays to work with a tax professional.
Good luck with your taxes.
Any information in this post or any that follow may or may not apply to you. Please consult with your tax professional before making any decision.
12-14-2016, 08:00 PM
#3
Registered User
And whatever you pay your preparer/CPA for advice or tax prep is a miscellaneous itemized deduction. Not only worth it, but deductible!
(I'm retired now so I can't be charged with tooting my own horn)
(I'm retired now so I can't be charged with tooting my own horn)
12-15-2016, 01:17 AM
#4
Thanks, Rob...my CPA loves me. He says I'm the most organized client he's ever had. 
I'm just so glad I'm only doing *my* taxes this year!!! Last year I was closing out both my parents' estates, also.
I'm just so glad I'm only doing *my* taxes this year!!! Last year I was closing out both my parents' estates, also.
12-15-2016, 01:51 AM
#5
Thread Starter
12-15-2016, 01:27 PM
#6
Rob, is there a specific level of income at which you start to lose some of the deductions. I seem to hit it at very different levels of income when comparing one tax year to another.
12-15-2016, 02:44 PM
#7
Thread Starter
For example the personal exemption for Married Filing Joint (MFJ) taxpayers for the tax year 2016 begins to phase out at $311,300 of AGI and is completely phased out at an AGI of $433,800. For single tax payers the phase out begins at $259,400 and is complete at $381,900. In 2015 the phase out for MFJ began at $309,300 and was complete at $432,400.
Itemized deductions begin to phase out (MFJ) $311,300.
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12-18-2016, 08:31 AM
#9
Rob, as always, thanks for your wise advice. 
For those who don't see the politics section, Rob also made some excellent comments about accountants and accounting. One thing that I wanted to share was about cost accounting. Even though I was an industrial engineer manager and then director, one of the proudest moments in my career was when the Finance folks made me an honorary cost accountant, due to the amount of work I did with them preparing our annual manufacturing budget. I even got to attend their budget dinners!
For those who don't see the politics section, Rob also made some excellent comments about accountants and accounting. One thing that I wanted to share was about cost accounting. Even though I was an industrial engineer manager and then director, one of the proudest moments in my career was when the Finance folks made me an honorary cost accountant, due to the amount of work I did with them preparing our annual manufacturing budget. I even got to attend their budget dinners!
12-18-2016, 09:39 AM
#10
Rob, as always, thanks for your wise advice.
For those who don't see the politics section, Rob also made some excellent comments about accountants and accounting. One thing that I wanted to share was about cost accounting. Even though I was an industrial engineer manager and then director, one of the proudest moments in my career was when the Finance folks made me an honorary cost accountant, due to the amount of work I did with them preparing our annual manufacturing budget. I even got to attend their budget dinners!
For those who don't see the politics section, Rob also made some excellent comments about accountants and accounting. One thing that I wanted to share was about cost accounting. Even though I was an industrial engineer manager and then director, one of the proudest moments in my career was when the Finance folks made me an honorary cost accountant, due to the amount of work I did with them preparing our annual manufacturing budget. I even got to attend their budget dinners!
Oooo the accountant's budget dinner. I'll bet Bea didn't let you go to that one alone!!