Have you wondered how much you’ve overpaid in taxes this year? If so, you likely want to do all you can to get as big a refund (or pay as little) as possible. As we inch closer to the end of 2017, now is the time to review what moves can and should be made during the last few weeks of the year. It’s not too late to make financial moves that can increase your refund! Take control and be proactive with this list of eight tax tips for your 2017 tax return.
Select a Tax Pro
Tax filing is complicated. Finding a professional tax preparer should be at the top of your list to make sure you get the most from your return. You want a tax pro that is well-versed in all of the recent federal and state tax laws and current changes, so you get all the deductions and credits you’re entitled to.
Hunt & Gather
Time to start digging through those piles; you’ve got documents to pull together that are needed to file your annual tax return and more coming in the next weeks. Stay organized by separating paperwork into four simple categories: income items, deductions, life changes, and other. If you have self-employment activity or experienced other significant life challenging events, such as taking care of parents or losing a job, you probably can use a couple of more categories. You’ll appreciate having all that you need at your fingertips when it’s time to meet with your tax pro.
Reduce Taxable Income
Even if you contribute regularly to your traditional 401(k), or a similar workplace retirement plan, consider contributing up to the max before December 31 to reduce your taxable income for the year. For those with an IRA, keep in mind that you have until April 17, 2018 to make 2017 IRA contributions. If you are age 70 ½ or older, and you have a traditional IRA or conventional pension plan, be sure you have taken your annual required distribution to avoid penalty.
Declutter and reap a tax break! Donate your gently used, unwanted items (in good condition) to a qualified charitable organization. Remember, only contributions to IRS approved charities are deductible. Also, be sure to retain receipts for any donated items you’ve purchased, like food and gifts.
Review your upcoming education expenses; consider maximizing your tax return education credits by prepaying college tuition bills that are due in early 2018. This can result in a bigger credit on this year’s Form 1040, as you can claim a 2017 credit for prepaying tuition for academic periods that begin in January through March of next year. Talk to a tax pro if you have any questions.
You can deduct the mortgage interest on your first and second home that you pay on loans, home equity lines of credit, and on construction loans. Did you buy that boat or RV last year? You may be able to deduct the interest on your tax return. And don’t forget your real estate taxes — these are also deductible.
Small business or self-employed
There are dozens of considerations, tax deductions and even tax credits available to small businesses and for the self-employed. Be sure to know all the rules related to your full time business or smaller business on the side. Those extra deductions including travel expenses, computer expenses, cell phone, internet fees and even business gifts are often overlooked but can make a better tax bottom line.
That Miscellaneous Sweet Spot
“Miscellaneous expenses” is a catch-all category that includes tax preparation fees, expenses for income-generating hobbies, gambling losses, unreimbursed employee expenses such as union dues, travel for work, and more.
Even with the ongoing discussions of tax reform, which have raised questions about future tax planning, traditional planning is still imperative! There have been changes since 2016 – talk to a tax pro to understand your specific situation and to reduce the taxes you’ll owe and get a bigger refund. Do yourself a favor – prep for end of the year while time is still on your side.