Michael Choate Associates CPA

Top Thirteen Tax Saving Ideas for 2016

13.  Make sure you are not surprised on April 15th.  Be proactive.  Make sure you don’t incur unnecessary tax penalties for underpayment of estimated tax or tax penalties for late payment.  Why pay more?

12.  Determine your current tax bracket and how the recent tax increases and Affordable Care Act changes will impact you. Remember to include payroll taxes and Louisiana tax rate too. Knowledge is power!

11.  Start a sideline or home-based business. Convert a leisure activity into a business activity.  This will allow you to deduct many current expenses. Include your children in the family business. Let us show you how! Consider investing in business with a family member or close friend. Review your entity structure… “C” Corp, “S” Corp and LLC structure.

10.  Business owners / self-employed consider tax loophole for large SUV's or trucks used in business. New vehicles purchased and used for business purposes over 6000 lbs -bonus depreciation up to 50% of cost. Business mileage allowance for 2016 is .54 cents per mile.

9.  Business owners take a 50% bonus depreciation allowance in addition to $500,000 Sec 179 expense for all equipment purchased in 2016. 

8.  Business owners-let us analyze and reallocate your compensation package...taxable vs. non-taxable benefits. Salary, dividends, car allowances, travel, expense allowances, fringe benefits, meals and entertainment and more. . . 

7.  Investors consider variable annuities to grow "tax deferred." Increased returns and increased safety may be achieved. It is time to get a second opinion!

6.  Determine eligibility for $5,500 IRA for you and your spouse and add $1,000 more if you are over 50 years old. Also consider ROTH IRA if joint income less than $194,000. Consider converting taxable IRA to tax free Roth IRA.

5.  Employees increase 401k contributions to 2016 maximum of $18,000. (Add $6,000 if over 50 years old)

4.  Business owners with less than 20 employees, consider Simple IRA vs. 401k Plan.  Defer $12,500 + 3% of your compensation. Add $3,000 if over 50 years old. No top heavy restrictions. Also consider 401(k) safe harbor plan and defer even more.  

3.  Investors also review your investment asset allocation mix - capital gains tax 2016 is 15%.   Dividends are also taxed at 15%.  If your taxable income is less than $464K these rates still apply. Lock in stock portfolio tax losses. Sell now and buy back similar stocks or mutual funds.

2. Invest in children's education funds with Education IRA/529 Plans - tax exempt earnings can be used for school tuition. Take advantage of education credits and the $4,000 college tuition tax deduction.

1.  And the #1 tax saving idea for 2016 is to schedule a tax planning strategy session with Michael.   Call 225-292-7434 in Baton Rouge or 985-674-9092 in Mandeville.  Email: mike@choatecpa.com  Email: mike@choatecpa.com