Smart tax planning should be a year-round activity – it’s not about something you should take care of when you finally prepare your tax return. No matter whether you’ve filed last year’s tax return, you must think about 2017 taxes.
Here are three things you can do in 2017 to curtail your taxes and enhance refund as well.
1. Purchase a home – If you’re just on the fence about purchasing a home, do it right now. Tax benefits in respect to buying a home are really motivational. Here are 5 profitable tax breaks offered to the homeowners.
- Mortgage interest – It allows you to deduct interest on up to 1 million USD worth of mortgages on your first or second home. If you have a 300,000 USD mortgage at 4 percent interest, you can avail a deduction of over 10,000 USD each year for first few years of mortgage.
- Insurance – If you wish to put less than 20 percent at down payment on your home, you’ll need to pay mortgage insurance. And this will be tax-deductible subject the pre-determined income limitations.
- Property tax – Property tax that you pay on primary residence is tax-deductible and this is even nicer in high-tax states such as New Jersey.
- Points – If you’ve paid discount points for getting a lower interest rate, this will be tax-deductible.
- Capital gains exemption – If you eventually sell your property, you can gain up to 250,000 USD (500,000 USD for the couples) before you pay income tax on the gains.
2. Get a change of place – If you’re planning to move to a different part of the country, the moving expenses will be tax-deductible, provided the move should be related to initiation of a new job. You don’t need a new job lined up prior to you move; even for your expense to qualify, you can avail the tax deduction but you have to pass two tests.
- Distance test – As per Internal Revenue Service (IRS) , the new workplace should be a minimum of 50 miles farther from you present home than your previous job location was from your home. If you’re not employed, you new job posting should be a minimum of 50 miles away from your present residence. In a nutshell, the move should be far enough from your job location to justify tax break.
- Time test – You have to work as a full-time employee for at least 39 out of 52 weeks right after the move. Alternatively, you must have to find a full-time job within first three months of moving to avail the tax deduction. If you pass the two tests, you’ll be eligible for a tax deduction on packing supplies, driving mileage, hired movers, shopping costs, and lodging expense on the way to the new residence. If you’re from Miami, you can discuss it with an income tax consultant in Miami for proper guidance.
3. Be generous about doing charity – About 20% of total charitable donations happen during the last 2 days of a financial year. So it is fair enough to assume that many more charity happens in the last few weeks before year ending; tax payers are in a giving spirit at that time. But the fact is charitable organizations are in need of money throughout the year, not only at the end of year. Make a resolution to give charity steadily throughout 2017. For example, if you want to donate to a senior care home, do it, say in, May. Donation is always welcome, but if you make it when they are facing hard time, they’ll simply shower blessings.
Don’t allow your tax to kill you. Be prepared beforehand so you can avoid unwanted headache and paying extra money towards tax. If you’re in Miami, ask a tax specialist in Miami, Florida for better understanding on tax facts.