Have you been putting off filing your taxes, dreading how much you are going to owe? Don’t stress too much, there are still a few tax deductions that you can make if you act before April 18. We will go through what they are and what you need to do to take them.
- Contribute to Your IRA
If you make a contribution to your IRA before April 18 you can have your custodian name it as a 2016 contribution. You can deduct up to $5,500 of your contribution. If you are over 50 years old, you can deduct up to $6,500. If you have a spouse that does not work and is under 70 ½ years old you can make a contribution to their IRA and take another $5,500 tax deduction. That would mean you would be able to take up to an $11,000 deduction. If you aren’t sure how to make this contribution meet with your financial advisor so they can help you make the contribution correctly and in time.
- Contribute to Your HSA
You can make a tax-deductible contribution to your HSA if you have a high deductible plan. You must make this contribution before April 18 if you want to be able to apply it to your 2016 taxes. You can deduct up to $3,350 for an individual plan and $6,750 for a family plan. For anyone over the age of 55 that is covered by the plan, you can add another $1,000 to the deduction limit. It is important to note that if you did not have an HSA for the entire year your deduction will be prorated to the actual length of time that you had the HSA for. Another important point; if your employer makes a contribution in your name, you cannot take the deduction.
- Contribute to Your Qualified Retirement Plan
If you are a business owner, even if it is a side business, you can make contributions to a qualified retirement plan (such as a 401(k), profit-sharing plan, or pension plan) that are tax-deductible. The plan must be set up by the end of 2016 to be able to take the deduction.
Still need more time? Talk with your tax preparer and file an extension to give yourself more time to get things together. This will extend the date that you have to file, but it will not extend the date for taking advantage of this and other deductions. Be sure that you used a qualified tax preparer that can answer all of your questions and get you the largest tax return possible.