December 2015 Newsletter

December 2015 Newsletter

Happy Holidays!!!!

holiday party cropped

From all the festive folks at Billings & Company, CPAs to all of our fun-loving and fabulous friends, we would like to wish you the happiest of holidays!!!! Happy holidays……happy holidays………may the tax breaks be bringing happy holidays to you…….

Here are some last minute tax tips that you still have time to take advantage of before the new year.

Health Savings Accounts If you have a high deductible health plan, either all year or as of December 1st, you may qualify to open a Health Savings Account.  It’s a tax deduction for the year of the contribution. You use the funds for qualified medical, dental, and optical expenses.  You must OPEN the HSA by 12/31/15, but have until April 15, 2016 to fund it.  We can even tell you how much you would save by putting various amounts in it.  See our HSA blog post for more info.
BUNCH THOSE DEDUCTIONS: If you come close to itemizing deductions every year or perhaps just shy of having enough, one strategy is to bunch itemized deductions every other year.  Items you want to pay before the end of the year to do this:

  • Prepay real estate tax that isn’t due till next year
  • Make charitable contributions for next year before the end of this year.
  • Clean out those closets and that messy garage.  Donate to places like the Salvation Army, Goodwill, etc. and keep track of what you gave and its fair market value.  Don’t forget to get a form showing you made a donation.
  • Pay your 4th quarter state and local estimated payments now that aren’t due until next year
  • Pay those medical, dental, and optical bills (if the total paid will exceed 10% of your adjusted gross income; 7 1/2% if age 65 or older).
ROTH IRA Conversions: In some cases you can convert from a Traditional IRA to a Roth IRA if you feel you will be in a lower tax bracket now than when you would be withdrawing those funds.  You will increase you adjusted gross income and taxable income in the year of the conversion, but will not pay tax on the distributions later.

Another ROTH tip:  Generally, YOU MAY NOT CONTRIBUTE TO A ROTH IRA if you file Married Filing Separate.  6% excise penalties exist for every year money is in a Roth that was not allowed to be made.

Both Traditional and Roth IRA Contributions can be made for 2015 until April 15, 2016

Qualified Tuition Plan (aka 529 Plan) You have until December 31, 2015 to open and fund this plan for saving for college. If you are an Ohio resident you must use the Ohio 529 plan which you can sign up for on www.collegeadvantage.com.

Linda Reinhardt

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