There are still a few months before tax season, but if you’re looking for some extra deductions to get more money back, this is the time to make a plan.
The editors of TheStreet has a few tips to get you ready for tax season:
1. What can we do now to prepare for tax season?
First, you want to get yourself organized. Find a folder or a safe place that you can put all of those important tax documents as they come in. And you also want to look back on the year and recognize any major life events that can affect your taxes. Marriages, divorces, having children, buying a home — these are all events that can impact you taxes one way or another.
2. How about medical deductions?
You can deduct qualified medical expenses that exceed 10% of your adjusted gross income for the year, so your might want to start making more appointments to get you over the 10% mark. Things like glasses, hearing aids and medical test all count towards reaching the deduction.
3. Parents paying their kids tuition — there’s a way to get credit for that right?
Absolutely. If you can pay the winter semester’s tuition in December, you can be eligible for an education credit of up to $2,500.
4. How can retirement savings reduce your taxable income?
You can contribute up to $5,500 to an IRA for 2016 and if you’re 50 or older, you can kick in an additional $1,000 in catch-up contributions. You have until April 2017 to make an IRA contribution for 2016 so there’s plenty of time.
5. And don’t forget about Health Savings Plans.
That’s right. Contributions to HSAs aren’t subject to federal income taxes. Earnings to an HSA from interest and investments are tax-free and the distributions to pay for qualified medical expenses like eye exams and lab tests are tax-free.
6. Any other ways that we can lower that dreaded tax bills?
I have one more for you. If you itemize your deductions you should make your fourth-quarter state and local quarterly tax payments in December instead of January to benefit from the reduction.