Year-End Tax Planning Moves for Individuals

Realize losses on stock while substantially preserving your investment position. There are several ways this can be done. For example, you can sell the original holding, then buy back the same securities at least 31 days later. It may be advisable for us to meet to discuss year-end trades you should consider making.

Postpone income until 2017 and accelerate deductions into 2016 to lower your 2016 tax bill. This is especially true for this year end as tax law changes that reduce tax rates are planned.

For 2016, the”floor” beneath medical expense deductions for those age 65 or older is 7.5% of adjusted gross income(AGI). Unless Congress changes the rules, this floor will rise to 10% of AGI next year. Taxpayers age 65 or older who can claim itemized deductions this year, but won’t be able to next year because of the higher floor, should consider accelerating discretionary or elective medical procedures or expenses (e.g., dental implants or expensive eyewear).

You may want to pay contested taxes to be able to deduct them this year while continuing to contest them next year.

You may want to settle an insurance or damage claim in order to maximize your casualty loss deduction this year.

Take required minimum distributions (RMDs) from your IRA or 401(k) plan (or other employer-sponsored retirement plan). RMDs from IRAs must begin by April 1 of the year following the year you reach age 70 1/2.

Increase the amount you set aside for next year in your employer’s health flexible spending account (FSA)mid you set aide too little for this year.

If you become eligible in December of 2016 to make health savings account (HSA) contributions, you can make a full year’s worth of deductible HSA contributions for 2016.

If you are thinking of installing energy saving improvements to your home, such as certain high efficiency insulation materials, do so before the close of 2016. You may qualify for a nonbusiness energy property credit” that won’t be available after this year, unless congress reinstates it.

Make gifts sheltered by the annual gift tax exclusion before the end of the year and thereby save gift and estate taxes. The exclusion applies to gifts of up to $14,000 made in 2016 and 2017 to each of an unlimited number of individuals. You can’t carry over unused exclusions from one year to the next.