Clearwater Tax and Accounting Service, LLC

TAX TIPS

If you have young children – The Child Tax Credit (for children under age 17) remains at $1,000 per child, with some income limitations.

If you are in college or if you have children in college - The American Opportunity Tax Credit and the Lifetime Learning Credit or Deduction could save you taxes. You could qualify for up to a $2,500 tax credit, with 40% of it being refundable. Again, there are some income limitations.

Student Loan Interest – You could be eligible to deduct up to $2,500 from your income for interest you paid on student loans during the year.

Business Owners – You are being encouraged to invest in your business equipment with a special 50% first year bonus depreciation option.

Energy Credits – A 10% credit (maximum of $500 accumulated credit) is offered through 2016. Credits are also available for solar and geothermal improvements through 2021.

Other tax breaks
  • Teacher deduction of up to $250 for classroom supplies purchased
  • Sales Tax instead of state income tax deduction
  • Mortgage insurance premium deduction for your principle residence
  • Adjustment to income for post-secondary tuition
  • IRA proceeds as a direct charitable contribution for those over 70 1/2
  • Home mortgage debt forgiveness relief
  • Section 179 deduction for equipment


Ways to reduce income
  • Contribute more $ to pre-tax retirement accounts or traditional IRAs
  • Use flexible spending accounts for medical and daycare expenses
  • Start a (529) college plan
  • Rebalance your portfolio in order to take deductible losses


Ways to increase deductions and credits
  • Document your cash donations – receipts are required
  • Donate household items and clothing to a charity –document fair market value per item
  • Keep track of your volunteer activities and deduct out of pocket expenses. Log your miles for church, school and other non-profit organizations
  • Plan your vehicle donation – know the rules. To deduct fair market value the charity is required to either use it, donate it to the poor, or improve it.
  • Donate appreciated stocks to charity so that you don’t have to claim the gain by selling the stock.
  • If you are covered by a high deductible health plan and are under age 65 you can start a health savings account (HSA). It can be pre-tax if you are an employee or tax deductible if you are self employed or open your HSA on your own.

Health Care Law - Since 2014 all taxpayers are required to have health insurance and will be subject to a penalty unless considered exempt. Exempt individuals are those incarcerated, not legally present in the US, members of certain religious sects, American Indians, those on Medicare and Medicaid, children's health insurance, vetran's health care or any other government insurance.