Tax time is quickly approaching, but you can still save money on your federal return. Here’s how.
“Even though the tax deadline is approaching quickly, it’s not too late to minimize your tax liability and maximize your tax refund,” says Zane Christopher Jr., Board of Director Member of TaxSlayer LLC. Consider these four last-minute suggestions to positively impact your 2016 tax return.
1. Assess Stocks You Sold
If you sold stocks that were losing money before the end of the year, Christopher points out that you can write off the loss on your 2016 tax return. This is called tax-loss harvesting. “You can use the loss to offset your income up to the allowable limit of $3,000,” he says, “In addition, capital losses can offset capital gains.”
2. Save Extra for Retirement
Even if it's too late to make extra deposits into your 401(k) account, you can still make tax-deductible contributions to a traditional individual retirement account, if you qualify. Putting extra funds into your IRA is therefore a good way to reduce your tax liability today while also increasing your retirement savings for tomorrow, Christopher says. The maximum contribution is $5,500 if you’re 49 or younger and $6,500 if you’re 50 or older, and you have until April 18, 2017 to make deductible contributions on your 2016 tax return.
3. Contribute to Your Health Savings Account
While not everyone has tax-deductible medical expenses, an HSA can help minimize your taxes now. If you use a health savings account to pay qualified medical expenses, the IRS treats contributions the same way it treats retirement contributions: It collects taxes on the money when you withdraw it, not when you deposit it. So contributing the maximum to your HSA — if you’re under age 55, it’s $3,350 for individuals and $6,750 for families, and if you’re age 55 and older, it’s $4,350 for individuals and $7,750 for families — can help you reduce your 2016 tax bill. Like a traditional IRA, you have until April 18, 2017, to make 2016 contributions.
4. Calculate Business Expenses
If you own a business, you can deduct capital investments (for example, business equipment) from your 2016 tax return as long as you made the purchases by the end of the year, Christopher says. Look over your business expenses to ensure you’ve documented all of them.
Whether you’re filing taxes online or offline, time is of the essence. Act quickly, as these eleventh-hour tax-saving tips may help you with a bigger tax refund to help you keep your financial resolutions. Visit the Regions Tax Center for more information about filing your taxes.