Monday is October 16th and frantic tax filers of late returns will be looking for any means possible to pay less to Uncle Sam.
The following tips should help you file your return and officially close this tax reporting year:
Your year-end tax planning can be extremely important when tax season rolls around. When you’re setting up your tax planning before year-end, be sure to include these two things to help lower your 2017 tax bill.
Open an HSA
If, like most self-employed people, you pay for your own health insurance, consider opening a Health Savings Account (HSA). An HSA is like a health IRA that is coupled with a health insurance policy with a high deductible. You can deduct contributions to your HSA and then use the money to pay almost any uninsured health-related expense. And you don’t have to pay any taxes on these withdrawals. For 2017, individuals can contribute up to $3,400 and family plans up to $6,750 to their HSAs (people over 55 can contribute $1,000 extra). If you set up your HSA and contribute by December 31, 2017, you can make a full year’s worth of deductible HSA contributions for 2017.
Donate to Charity
If you itemize your deductions, you’ll lower your 2017 income taxes by donating to charity by the end of the year. You can donate money, property, or both, to any qualified charity and take a deduction. If a charity has obtained a determination letter from the IRS recognizing its status as a 501(c)(3) public charity, then it is qualified for tax purposes and donations to it are deductible. Many nonprofits include copies of their IRS determination letter on their website and their taxpayer identification number on fundraising solicitations so donors know they can deduct donations to their organization. The only 501(c)(3) organizations that are automatically considered qualified organizations (without a determination letter from the IRS) are churches and other religious organizations. Make sure to keep records of all your donations.
The IRS maintains a database of qualified organizations, which is available to the public on its website. Other organizations maintain even more extensive lists of nonprofits. For example, the website GuideStar lists over 1.5 million nonprofits.
For more tax tips like these, download a copy of our year-end tax savings newsletter.