Tax Tips to Consider

At Mersberger Financial Group, we try to focus on all the areas of planning, one of which includes tax planning strategies. We would like to extend some tax tips out to you that may be helpful as you are preparing your 2016 tax return.

Andrea J. Zoeller, CFP®

Jan. 4th, 2017

A 1040 form
A 1040 form
Tax Tips to Consider

At Mersberger Financial Group, we try to help our clients take advantage of the tax strategies available to them. We work with your tax professional to see what strategies might best fit your financial situation. As the year comes to an end, we have some tips to consider as you prepare your taxes for the 2016 year.

  1. Make sure to wait for all necessary 1099’s
    A lot of times, you will receive preliminary 1099 statements for your accounts prior to receiving the final one with all the pertinent information you need. When collecting your 1099 statements to bring to your tax professional, make sure you are bringing the 1099 that is labeled “Complete” or “Final.” Mutual fund companies have until February to file their information which means Custodians have until the end of February to issue final 1099’s.
  2. Make sure to submit all 1099’s with your taxes
    Many times if a 1099 is forgotten with the tax return, you may receive a letter stating that you owe additional taxes. Without sending in the 1099 to accompany the tax return, the IRS doesn’t have a record that the money has already been paid in. To avoid this, make sure all necessary 1099’s are sent in with your tax return.
  3. Consider Additional Contributions to your Employer Plans
    Contributions into your 401(k) can offer a tax deduction to you through the pre-tax option, which could help decrease your taxable income. Additionally, employer plans provide tax-deferred growth until distributions are taken. For 2016, the maximum contribution allowed into a 401(k) is 18,000 and with a catch-up contribution for those 50 and older. Lastly, contributions to your 401(k) must be done by December 31st.
  4. Consider Additional Contributions to your IRA or Roth IRA
    Contributions into your IRA can allow for a tax deduction as well for those who fall within the acceptable income thresholds. While Roth IRA’s don’t allow for a tax deduction, both allow for tax-deferred growth. For 2016, the maximum contribution allowed into IRA’s and Roth IRA’s is $5,500 with a catch-up contribution for those 50 and older. This $5,500 is the total amount allowed between the two IRA accounts. Unlike employer plans, contributions to these retirement accounts are able to be made up until April 15th to count for the previous tax year.
  5. Consider Contributions to a Health Savings Account
    Do you have a high deductible health plan? If so, you may be allowed to contribute to a Health Savings Account which can also help reduce your taxable income. This type of account actually offers multiple tax benefits because they use pre-tax dollars to make up the contributions plus any earnings grow tax-free and when you take a distribution to pay for a qualified medical expense, those are tax-free too! For 2016, the maximum contributions for individuals and families are $3,350 and $6,750 respectively with a catch-up contribution for those 55 and older.

Please contact our office if you have any questions regarding this topic.

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