(WTNH) — There is just one week left of 2016, and that means 2017 is right around the corner; and so is tax season.
As we wrap up December and 2016, it’ll be tax season before you know it. Here are some things to watch out for if you’re looking to maximize the time left for 2016 taxes.
- Try lowering your tax bill by accelerating deductions this year.
For example, giving to charity is one way to get a deduction. But make sure to get a receipt to back up any contribution, regardless of the amount.
- What better investment than a tax-deferred retirement account.
They can grow substantially because they compound over time, free of taxes. Company-sponsored 401(k) plans may be the best deal for this because employers often match contributions. So try to increase your 401(k) contribution to put in the maximum amount of money allowed (which is $18,000 for 2016, $24,000 if you are age 50 or over). If you can’t afford that much, try to contribute at least the amount that will be matched by employer contributions.
- Consider contributing to a Interest Revenue Account, or IRA.
You have until April of 2017 to make IRA contributions for 2016, but the sooner you get your money into the account, the sooner it has the potential to start to grow, free of taxation
- Making deductible contributions also reduces your taxable income for the year.
You can contribute a maximum of $5,500 to an ira for 2016, plus an extra $1,000 for those 50 or older.
So with only one week left in 2016, those are just a few things to think about, as you get ready for the year ahead.
As for Flexible Spending Accounts for health care, that is a “use it or lose it” account for medical costs or child care. Don’t forget that you must spend that money by the end of the year, or else you forfeit the excess.
Check to see if your employer has adopted a grace period, which is permitted by the IRS, allowing employees to spend 2016 set-aside money as late as March of 2017. If not, you can always make a last-minute trip to the drug store, dentist or optometrist to use up the funds in your account.