Year end tax preparations...

[edro]

What are some things people do this time of year in preparation for tax season?

I have heard some people will do last minute 401k, Roth IRA, etc funding to reduce their tax liability or to fill their max allowable contributions.

What do some of you do?
Maybe I and others should be doing it too.

I brought this up because I think I should move some of my savings account funds to my Roth to max out my contribution limit for this year.
The Roth is essentially a savings account anyway (post-tax, can withdraw contributions any time no penalty), so why not max it out?

Other activities we should/can do? Last minute donations, etc...

 

[Ns1]

business expenses.

 

[s0me0nesmind1]

1. Ensure you are within your desired income bracket depending on what you're trying to accomplish. Examples include: ROTH IRA income limitations (MAKE SURE your end year income is within the limit amounts). Another example would be tax credits - usually for lower income individuals.

2. Start gathering up tax deduction documentation such as donations, state taxes paid, etc... You can also gather up interest paid for items such as checking/savings interest. Just because you don't get a 1099-INT doesn't mean you don't owe tax on the interest.

3. Consider paying your 2016 property taxes THIS year. This allows you to deduct both 2015 taxes paid, AND 2016 taxes paid.

And yes, people will make late contributions in order to reduce their overall income. Though to be honest, the people that usually worry about that are people that should have it maxed out already anyway...

That's all I have at the moment...

 

[jaha2000]

What are some things people do this time of year in preparation for tax season?

I have heard some people will do last minute 401k, Roth IRA, etc funding to reduce their tax liability or to fill their max allowable contributions.

What do some of you do?
Maybe I and others should be doing it too.

I brought this up because I think I should move some of my savings account funds to my Roth to max out my contribution limit for this year.
The Roth is essentially a savings account anyway (post-tax, can withdraw contributions any time no penalty), so why not max it out?

Other activities we should/can do? Last minute donations, etc...

401K does reduce tax liability. Roth IRA = Zero present tax benefit. Not sure why people get that mixed up all the time.

I make sure I get as many things maxed in the retirement area as I can. you should be maxing your Roth IRA every year, this is the only item out there with tax free growth.

 

[Schfifty Five]

What are some things people do this time of year in preparation for tax season?

I have heard some people will do last minute 401k, Roth IRA, etc funding to reduce their tax liability or to fill their max allowable contributions.

What do some of you do?
Maybe I and others should be doing it too.

I brought this up because I think I should move some of my savings account funds to my Roth to max out my contribution limit for this year.
The Roth is essentially a savings account anyway (post-tax, can withdraw contributions any time no penalty), so why not max it out?

Other activities we should/can do? Last minute donations, etc...

Moving money into your ROTH (IRA or 401k) will not reduce your year-end taxable income. Only a traditional IRA or 401k will do that.

For IRAs, you have until 4/15 of the following year to make your contributions for the previous plan year (so 4/15/2016 for the 2015 plan year).

 

[edro]

401K does reduce tax liability. Roth IRA = Zero present tax benefit. Not sure why people get that mixed up all the time.

Moving money into your ROTH (IRA or 401k) will not reduce your year-end taxable income. Only a traditional IRA or 401k will do that.

I know, that's why the OP said:
or to fill their max allowable contributions.

Thanks for the 4/15 date.. I wasn't sure if that was just the last date to file, or if you could also pay into your retirement plans up to that date and still count towards last year.

 

[Red Squirrel]

I used to make sure to buy RRSPs otherwise I end up having to pay extra taxes, but I set those up to just come out of the bank now, so I don't worry about buying in lump sum anymore. Throughout the year anything that can be claimed I put in a "[year] taxes" file and by tax season when I got all my papers I drop them off to my tax person to get them done. It costs around $40 to get them done so to me it's a no brainer to let a pro do it. They keep up with all the tax rules, changes, etc. and can give tips on how to get a better return.

I'm looking forward to this year to see how much I get back since I sponsor two children for about $70/mo so I'm sure that's going to add up. I don't think there's a cap to how much you get back from charity either.

 

[DaveSimmons]

> I don't think there's a cap to how much you get back from charity either.

40% of AGI, I think.

My last charitable deduction for the year will be Child's Play 2015, see you there. Donation matching!

 

[edro]

> I don't think there's a cap to how much you get back from charity either.

40% of AGI, I think.

My last charitable deduction for the year will be Child's Play 2015, see you there. Donation matching!

50% of AGI
https://www.irs.gov/Charities-&-Non...anizations/Charitable-Contribution-Deductions

Still... wow!
I thought charitable contributions were capped at like $500 for some reason.

If your total deduction for all noncash contributions for the year is over $500, you must complete Form 8283 and attach it to your Form 1040.

Oh, you just need an extra form if its over $500.

Still... I need to claim more charitable contributions this year.
Time to make some more trips to Goodwill over the next 2 months.

 

[s0me0nesmind1]

50% of AGI
https://www.irs.gov/Charities-&-Non...anizations/Charitable-Contribution-Deductions

Still... wow!
I thought charitable contributions were capped at like $500 for some reason.


Oh, you just need an extra form if its over $500.

Still... I need to claim more charitable contributions this year.
Time to make some more trips to Goodwill over the next 2 months.

Yes, but this is under the assumption you can get off the standard deduction amount anyways...

Which going to be tough for me this year With my home cost (~$150k) and low APR% I'm just not paying that much interest and taxes to get over the hump without some major moves.

 

[highland145]

Yes, but this is under the assumption you can get off the standard deduction amount anyways...

Which going to be tough for me this year With my home cost (~$150k) and low APR% I'm just not paying that much interest and taxes to get over the hump without some major moves.

I can give you a list of my favorite charities to help you out.

 

[ControlD]

I usually just start stock piling lube in anticipation of the rodgering to come in April.

 

[kranky]

Oh, you just need an extra form if its over $500.

Still... I need to claim more charitable contributions this year.
Time to make some more trips to Goodwill over the next 2 months.

You only need the form for NON-CASH (=goods) contributions over $500.

 

[steppinthrax]

I'm planning to get one of those hybrid hot water heaters for the tax credit. Based on my calc and the IRS tax credit (if it still exists), the water heater would come out to 200 or so after electric company rebate etc...

 

[manly]

401K does reduce tax liability. Roth IRA = Zero present tax benefit. Not sure why people get that mixed up all the time.

I make sure I get as many things maxed in the retirement area as I can. you should be maxing your Roth IRA every year, this is the only item out there with tax free growth.

The Retirement Savings Contribution Credit does help people with low wages:
http://www.bankrate.com/finance/money-guides/tax-credit-for-savings-made-for-retirement-1.aspx

> I don't think there's a cap to how much you get back from charity either.

40% of AGI, I think.

My last charitable deduction for the year will be Child's Play 2015, see you there. Donation matching!

Thank you!!