Tax planning strategies for individuals this year include postponing income and accelerating deductions, as well as careful consideration of timing related investments, charitable gifts, and retirement planning.
General tax planning strategies that taxpayers might consider include the following:
- Sell any investments on which you have a gain or loss this year. For more on this, see Investment Gains and Losses, below.
- If you anticipate an increase in taxable income in 2016 and are expecting a bonus at year-end, try to get it before December 31. Keep in mind, however, that contractual bonuses are different, in that they are typically not paid out until the first quarter of the following year. Therefore, any taxes owed on a contractual bonus would not be due until you file a tax return for tax year 2017.
- Prepay deductible expenses such as charitable contributions and medical expenses this year using a credit card. This strategy works because deductions may be taken based on when the expense was charged on the credit card, not when the bill was paid.For example, if you charge a medical expense in December but pay the bill in January, assuming it’s an eligible medical expense, it can be taken as a deduction on your 2016 tax return.
- If your company grants stock options, you may want to exercise the option or sell stock acquired by exercise of an option this year if you think your tax bracket will be higher in 2017. Exercising this option is often but not always a taxable event; sale of the stock is almost always a taxable event.
- If you’re self-employed, send invoices or bills to clients or customers this year to be paid in full by the end of December.
Some Recent Tax Settlements :
- Mr. Dillard – CA Owed $6884, IRS settled for $400
- Mr. Batiste – LA Owed $18513, IRS settled for $2972
- Mr. Johnson – CA Owed $21,378, IRS settled for $4500
- Ms. Gonzalez – TX Owed $28,816, IRS settled for $1700
- Mr. Anthony – NY Owed $14,000, IRS settled for $900
- Mr. Wilkes – CA Owed 32,211, IRS settled for $1250
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