United States: Take Advantage Of These Personal And Business Tax Savings Before The End Of The Year

Last Updated: November 4 2016
Article by Erick Cutler

Each year brings new tax changes, and with them, new ways to augment your tax planning strategy. There are numerous tax deductions, exemptions and credits out there right now. As end of year approaches and tax season looms, it's time to make sure you aren't missing out on any of them. A timely bit of creative tax planning can net you significantly on your returns. Below are some of the opportunities available this tax year. See how many you qualify for.

Educator Expense Deduction

The Educator Expense Deduction allows eligible educators to deduct up to $250 for out-of-pocket expenses that were not reimbursed to pay for school supplies, such as books and computers. If you are an educator of K-12 students, check here to see if you qualify.

Refundable Child Tax Credit
Also known as the Additional Child Tax Credit, this is a deduction for taxpayers who were not eligible for the full non-refundable child tax credit. That non-refundable portion of the credit is reimbursed with the Additional Child Tax Credit. This credit is available to families with three or more eligible children.

Transportation Benefit Parity

The tax codes have leveled the playing field for mass transit commuters. Workers who commute to their jobs via train, bus or van pools are now eligible for pre-tax deductions on transportation expenses in parity with car commuting co-workers' benefits who use it to pay for parking. Your environmental conscientiousness is paying off this tax year.

Charitable Conservation Contributions

You may be eligible to contribute real property interest to qualified conservation organizations when the contribution is expressly intended for conservation purposes. The maximum allowable deduction is equal to 50 percent of your adjusted gross income less any other qualified contributions.

Charitable IRA Distributions

A temporary tax deduction dating back to 2006, Sec. 408(d)(8) has been made permanent this tax year. This provision allows for a donation of up to $100,000 from a traditional or Roth IRA to a  qualified charitable organization. Charitable distribution from an IRA allows you to circumvent the percent of gross income restrictions placed on direct contributions.

Residential Energy Efficient Property Credit

As an added incentive to increase the energy efficiency of your home and another way to reduce your tax liabilities, the federal government is granting a Residential Energy Efficient Property Credit for qualified expenditures on energy-saving investments. If you've installed a solar water heater or electrical system, wind energy system, or geothermal heat pump, look into  this credit to see if your property qualifies.

Nonbusiness Energy Property Credit

Energy-conscious homeowners can get a little more tax saving with a credit of 10 percent of the amount spent on energy-saving investments that qualify. Energy-efficient doors and windows, insulation, and roofing are included among the qualifying energy improvements. There is a limit of $500 total credit for all years beginning in 2005, and a combined limit of $200 tax credit on windows.

Tuition and Fees Deduction

If you are a student, or the parent or spouse of a student, you can save up to $4,000 in deductions for tuition and other education expenses. To qualify for the deduction, you must be paying expenses for higher education on behalf of yourself, your spouse or a dependent. The IRS website provides more information on qualifications.

Mortgage Insurance Premium Deduction

Premiums for some mortgage insurance policies are tax deductible for qualifying homeowners. Eligible mortgage insurance providers are qualifying private mortgage insurance, the Federal Housing Administration, Department of Veteran Affairs and the Rural Housing Service. To find out what deduction amount you qualify for, contact your mortgage insurance provider.

Section 179 Expenses

Some of your property can be itemized on your tax form as an expense as opposed to a capitalized cost subject to depreciation. This can  reduce your net taxable business income by increasing your deductions. The property must be purchased and used for business or trade at least 50 percent. Your total eligible deduction is up to $500,000.

Bonus Depreciation

You may also earn additional depreciation value on your property courtesy of the Protecting Americans from Tax Hikes (PATH) Act of 2015. Qualified improvement property has been added for the current tax year. Learn more about bonus depreciation and those properties that qualify  here.

R&D Tax Credit

Similarly, you can lower your taxable net business revenues by claiming research and development costs as business expenses rather than capital expenses. Research and development expenditures that qualify must be for eligible products that are under R&D for the elimination of uncertainty about the product, as explained  here.

Mileage Deductions

Those miles you're putting on your vehicle commuting to and from work, between jobs, or for other qualified purposes are eligible for a tax deduction. Charitable work, moving expenses or medical commuting (e.g. hospital or doctor visits) may be adding up for you, and could in turn reduce your tax liability.  Visit here for current mileage rates.

Work Opportunity Tax Credit

The Work Opportunity Tax Credit (WOTC) is an incentive for employers to hire workers from specific groups who have historically been subject to difficulty in gaining employment. You can earn WOTC credit by hiring SSI recipients, food stamp recipients, unemployed veterans, ex-felons and other  target groups. For more information about earning WOTC tax credit, visit the U.S. Department of Labor.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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