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2016 Tax Checklist – A Roadmap to Tax Savings

Get ready for tax time by reading this quick blog post on last-minute tax savings.

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2016 Tax Checklist – A Roadmap to Tax Savings

2016 Tax Checklist – A Roadmap to Tax Savings

Advisors can add value to their client relationships by helping them minimize the wealth transfer that occurs each year at tax time by going over this 2016 tax checklist. Of course, most of your clients work with a professional tax advisor, but that doesn’t mean your clients shouldn’t hear from you about some important tax trimming tips this tax season.

A Checklist for Last-Minute Tax Savings

Make a Health Savings Account (HSA) Contribution: If your clients have a high-deductible health plan, they can make tax-deductible contributions to an HSA. The 2016 contribution limit for individual policies is $3,350, while the maximum contribution for family policies is $6,750. A catch-up contribution of $1,000 is available for individuals age 55 or older.

An HSA offers two compelling benefits: 1) withdrawals to pay for medical costs are tax-free, and 2) any remaining amount not used to cover health care costs can be used in retirement to fund any living expense, even if non-health care related, though such withdrawals will be taxed.

College Funding Credit: The American Opportunity Tax Credit offers a tax credit up to $2,500 per student to help clients who are paying for children’s college education. The credit is available to individuals earning up to $80,000 or married couples filing jointly who earn up to $160,000.

Still Time to Fund Retirement: Whether your client is employed or owns his or her own business, there is still time to open and fund a retirement plan to reduce 2016 taxes. It’s one of the last remaining tax reduction tactics still available at this stage.

Don’t Miss the Extension of Certain Tax Benefits: Tax provisions scheduled to disappear at calendar year-end often get renewed by Congress in the New Year and made effective retroactively. Among the provisions that were extended include:

• A $250 above-the-line deduction for educators who buy their own supplies
• Taxpayers over age 70½ can donate IRA funds up to $100,000 to a charity without paying taxes
• Sales taxes for taxpayers in states that do not have a state income tax may be deductible
• A residential property energy tax credit equal to 10 percent of the cost, up to $500, or a specific amount from $50–$300 for eligible items
• A 30 percent tax credit on higher cost renewable energy installation projects in 2016, such as geothermal heat pumps, solar panels (including photovoltaic and solar water heaters), small wind turbines and eligible fuel cells

Though tax advice is most appropriately left to a client’s professional tax advisor or accountant, it is, nevertheless, a conversation worth engaging in with your clients.

See referenced disclosure (2) (4) at http://blog.americanportfolios.com/disclosures/ 

About The Author

Keith Carravone

 

Director of Insurance Products 
631.439.4600, ext. 177 

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