Financial Focus: Tax-Planning in 1 week

1040 Taxes -logoFinancial Focus: Tax-Planning in 1 week

by Anthony Rivieccio, MBA 

As the year draws to a close, we should run through a last-minute checklist of tax planning issues. A turbulent economic and legislative environment means there are several major complications to heed. More importantly, note, now that several tax laws have become more permanent, NOW, is the time to start sound tax planning, not for 2015 but for 2016. That way, NEXT APRIL (2017) you can indeed achieve a much more favorable refund.

Manage Health Care Costs
If you have health care issues, bunching itemized deductible expenses into one year can help you exceed the adjusted gross income floor. If possible,  consider scheduling costly, non-urgent medical procedures in a single year to exceed the 10% AGI floor for medical expenses (7.5% for taxpayers age 65 and older).

Make Up Tax Shortfalls With Increased Withholding
Don’t forget that certain kinds of taxes are due throughout the year. Check your withholding and estimated tax payments while you have time to fix a problem. If you are in danger of an underpayment penalty, you can try to make up the shortfall by increasing withholding on salary or bonuses. A bigger estimated tax payment can leave you exposed to penalties for previous quarters, while withholding is considered to have been paid throughout the year.

Temporary Tax Credits-are now Permanent
Congress moved to make popular temporary tax provisions permanent. This change will impact everyone’s future planning decisions:
•Taxpayers aged 70 ½ and older can make tax-free charitable contributions to IRAs.
•Businesses can deduct up to half of eligible equipment placed in service this year.
•Students and parents can take an above-the-line deduction for tuition expenses.
•Companies can take a credit for qualified research expenses.
•Taxpayers in states without an income tax – e.g., Washington, Texas and Florida – can deduct state sales taxes.
•Teachers can take an above-the-line deduction for $250 in classroom expenses.

Document Business Activities
This applies to people who have their own practice or small businesses: The 3.8 % Medicare tax on business income may be avoided if you participate in the business enough so that you are not considered a passive investor. Participation is defined as almost any work performed in a business as an owner, manager or employee as long as it is not an investor activity. Even so, activities must be documented, and the IRS doesn’t allow ballpark estimates after the fact. Make sure you document the hours you’re spending with calendar and appointment books, emails, etc.

Out-of-State Tax Obligations
States have recently become more aggressive in taxing corporations that are not physically present in their states, but have significant sales to customers in those states. While there may be exceptions for limited business activities, it is wise to check on the activities of people who travel to different states to ensure you are filing all state corporate tax returns as needed.

Determine State Residency Status
For people who split their time in two different states throughout the year, consider where you may be taxed as a resident for 2015. Make sure you track the number of days you are spending in each jurisdiction. Generally, if a you live in a state for 183 days or more, that state will assert residency and the ability to tax all income. Furthermore, if you move to a new state but maintain significant contacts with your former state (including driver’s license, residences, bank accounts and the like), you could run the risk of being taxed as a resident.

Anthony Rivieccio is the founder & the CEO of The Financial Advisors Group, celebrating their 18th year as a fee only financial planning firm specializing in solving one’s financial problems. Anthony, a recognized financial expert since 1986, has been featured by many national and local media including: Klipingers Personal Finance, The New York Post, News12 The Bronx, Bloomberg News Radio, Bronxnet Channel 67 TV, The Norwood News, The West Side Manhattan Gazette, Labor Press Magazine, Financial Planning Magazine, WINS 1010 Radio, The Bronx News and The Bronx Chronicle.

For financial inquires, assistance or a FREE COPY of a 2015 Income Tax Guide, Anthony can be reached at (347) 575-5045 or

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