2016 Year-End Planning for Individuals
It’s that time of year again. Time to focus on year-end planning strategies. Year-end planning is particularly important this year given the large number of recent tax law changes that offer new tax savings opportunities, in addition to the many “time-tested” tax savings techniques that continue to apply.
It seems every year we are faced with a long list of popular tax breaks that have either recently expired, or are scheduled to expire in the near future. Fortunately, the PATH Act has made many (but not all) of these tax breaks permanent. For example, the following tax breaks that were previously scheduled to expire are now permanent: Election to deduct state and local “sales” taxes instead of deducting state and local “income” taxes; Contributions by individuals who have reached age 70½ of up to $100,000 from their IRAs directly to charity without triggering any income tax; Deduction of up to $250 for qualifying school supplies by school teachers; Expanded charitable contribution deduction for qualified conservation easements, and others. Unfortunately, however, the PATH Act extends some tax breaks only through 2016.
We have put together this article to help you navigate new tax planning opportunities available to individuals because of recent law changes. In this letter, we also remind you of the traditional year-end tax planning strategies that help lower your taxable income and postpone the payment of your taxes to later years. Tax Tip: Many of the tax breaks that could reduce your 2016 income tax liability are dependent on the amount of your adjusted gross income, modified adjusted gross income, or taxable income. We highlight these income thresholds prominently in this article.