Tax season 2016 is approaching fast. Here are six tips that can help you save tax and grow your wealth.

1. 6 Tax Savings Tips
For Tax Season

2. Effective tax planning should always
be done before the new year kicks
in.
Implement your tax strategies before
the end of the year in order to
receive benefits for the year.

3. Here we’ll discuss some tax saving tips that you can utilize to
ensure that you are all prepped up for the new year.

4. 1. Boost Retirement
Plan Contributions

5. • Taxpayers can save up to $18,000 in their 401(k)
plan.
• Those over the age of 50 can add another $6,000 for
a total of $24,000.
• While pre-tax contributions reduce taxable income,
after-tax Roth 401(k) contributions tend to be more
advantageous.

6. 2. Double Check
Minimum Distributions

7. • The IRS requires that RMDs are withdrawn by
December 31 of each year for retirement
account holders reaching age 72.
• IRS levies a harsh 50% penalty for those who fail
to take an RMD, so double check that the
distributions are correct.
• If you miss RMD, you can fill Form 5329 to waive
the penalty if you can show a reasonable cause
of error.

8. 3. Review Tax
Withholdings

9. • Estimated payments of 110% of the previous year’s tax
liability can be levied depending on the
circumstances to avoid the penalty.
• Reviewing Publication 505 (Tax Withholding and
Estimated Tax) gives more information on this subject.

10. 4. Donating to
Charity

11. • Financially helping charities is an effective way of
reducing your tax liability. You will have to file form 1040
in order to claim the deduction benefit.
• For donations of non cash gifts greater that $500, form
8283 should be filed.
• However, be careful as donating appreciated assets that
have been held for less than a year can end up in your
deduction being limited to the original investment.

12. 5. Tax gain/loss
harvesting

13. • Tax loss harvesting allows up to $3,000 per year in losses to
be written off. However, keep in mind the IRS prevents
making a loss claim if a substantially identical property is
bought within 30 days of the sale.
• If your taxable income is $74,900 or less ( for married
couple filing jointly) or $37,450 ( individuals), you may be
allowed for the 0 percent long-term capital gain rate for
assets held greater than a year.

14. 6. Accelerate
Deductions

15. • Certain payments can be accelerated so that they
can be made to waive off tax liability.
• However, accelerating deductions can also subject
you the alternative minimum tax so its advisable to
be extra careful and consult your tax advisor before
making a decision.

16. The best tax planning is not a fixed
regime. Each individual is unique and
so is their tax planning.
Speak to your financial and tax
advisors to find out what's the best
strategy that is suitable for you and
your financial success.
Wrapping it up

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19. References:
7 year-end tax tips |New Jersey.com
How to Get a Head Start on Preparing for This Tax
Season | Ace Cloud Hosting
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