Ho! Ho! Ho! 6 Holiday Tax Tips from Businesswise

Published in http://www.cincinnati.com/ 12/16/15: 

Tip No. 1:Defer income

Be aware of your tax bracket. The general rule is to defer income to next year when possible as long as your tax rate for 2015 is the same or higher than what it is projected to be in 2016.

Tip No. 2: Add to your retirement

Put as much money as you can into your 401(k) or similar workplace retirement savings plan. Traditionally, plan contributions are made on a pre-tax basis, so you’ll have less taxable income on which you will pay income taxes.

Tip No. 3: Review flexible spending accounts

If you contribute to a medical flexible spending account (FSA) through your employer, be sure you don’t waste it. As part of the Affordable Care Act the maximum contribution amount was set at $2,500 with annual adjustments for inflation.

Tip No. 4: Use capital losses to offset capital gains

If you have investment assets that have lost value, use these losses to reduce your overall income. Capital losses can be used to offset any capital gains. This is a good time to review your portfolio, and if you have more capital gains than losses, recognize capital losses to offset the excess gains.

Tip No. 5: Take advantage of owning a home

Home ownership provides a variety of tax breaks, some of which you can utilize by year-end to reduce your current year’s tax bill. For example, you can make your January mortgage payment by Dec. 31 and deduct the mortgage interest on your 2015 return. You may also benefit by paying your property tax payment due in early 2016 in December.

Tip No. 6: Pay college costs early

The American Opportunity credit is a wonderful way to let Uncle Sam help subsidize college costs if you qualify. The maximum annual credit is $2,500, with up to 40 percent of this credit refundable. That means you could get as much as $1,000 back as a tax refund even if you don’t owe any taxes.

For the full article writted by Tom Cooney and Crystal Faulkner please visit: http://www.cincinnati.com/story/money/business/2015/12/16/businesswise-six-tax-tips-holidays/77439350/ 

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