NDSU Extension Service - Ramsey County

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Reducing Your 2016 Taxes

Reducing your 2016 Taxes

            The April 15th tax deadline may seem a long ways off, but a little end of the year planning can have a huge impact on your tax bill. Use these tax tips to be better prepared for filing your taxes and lowering the amount owed.

            Find all your receipts and other paperwork, if you use paper. If you use online organizing tools, apps or software such as Quicken or QuickBooks, make sure all your information is entered and properly categorized. This is also a good time to set up or refine your organization for next year.

            If you have a shared-custody situation with an ex-spouse, agree on which parent can deduct the child/children as a dependent/s or claim the Earned Income Tax Credit.  If this wasn’t part of the divorce decree, talk to your ex and determine which option makes the most financial sense for all of you.

            Spend your Flex Spending dollars. Some employers allow you to keep $500 in your FSA account until the next year without losing it but that is not the case for all situations. Check if you need to spend the money by the end of the year to avoid forfeiting it. 

            Make your mortgage payment early, pay property taxes, tuition, medical bills or other deductible expenses now to increase this year's deductions – unless you'd be better off financially deducting those items next year.

            If you want to reduce the amount your heirs will face in taxes, you can give them money from your estate while you're still alive. You can give any number of people $14,000 each ($28,000 for a couple), and they pay no tax on the money. You can also pay educational or medical bills on their behalf, as long as you pay the provider directly

            Add to or open an IRA.  Bulk up your retirement planning even more by contributing to an individual retirement account. If you have an IRA account or open a traditional IRA, you might be able to deduct at least some of your contributions on your tax return. And while it's true you can wait until the April 15 filing deadline to contribute for the previous tax year, the sooner you put money into an IRA, traditional or Roth, the sooner it can start earning more for your golden years.

            Be generous to charities.  This is a good time of year to donate items you no longer need or to write checks to the less fortunate. Be sure to keep records of your donations. Consider photographing goods you donate to remind you what was included in the donation.

 

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