CPA Michelle Staebell from the New York State Society of CPAs discussed some year end tax tips Monday on News 8 at Sunrise.
“There’s so many decisions happening right now,” said Staebell. “For employees, they can elect retirement contributions for next year, their health savings accounts, deductible benefits for their child care expenses, and flex savings accounts. All these things will effect 2017 returns but the decisions have to be now.”
Staebell discussed health insurance considerations. “As far as we can tell, the Affordable Care Act is going to be in place and everyone needs to have health insurance,” she said. “You want to make sure you sign up for that by the end of the year because you could have to pay penalties if you don’t have health insurance.”
Of course, many can receive health insurance through their employer. “That’s the best case scenario, because insurance through an employer is usually on a pre-tax basis,” Staebell noted. “You’re saving on your taxes. You also don’t have to pay that Shared Responsibly Payment, which is still in effect. That is very expensive. It is $695 per person in the household that doesn’t have health insurance. That’s per adults. There’s also Shared Responsibly Payment per child, or two and half percent of your income — whichever is higher — so it can add up pretty fast.”
There are also considerations in terms of income. “For tax returns, you’re a ‘Calendar Year Basis Tax-Payer,’ so all the income that you earn during the calendar year is taxable,” said Staebell. “If at all possible, defer some of your income until 2017 and you won’t be taxed on it in 2016. For example, if you’re going to sell some stock and it will results in a gain, maybe wait until January of 2017 to do that. Conversely, if you’re going to sell some stock at a loss, do it now to get those loses into the 2016 return.”
Staebell had similar advice for the self-employed. “The same concept applies,” she said. “For small business owners, sometimes they can defer their bill later in December so they don’t get paid until January. That income usually won’t be picked up until they receive payment. Or maybe they can pre-pay some expenses in 2016 to get those deductions a year earlier. This only works for some businesses. They have to be cash-based businesses, so be sure to consult your tax accountant before you do any of those steps.”
For more information on year end tax tips, visit the NYSSCPA website, click here.