Tax Tips For Families and Individuals
Enroll and Contribute to Retirement Accounts
If you haven’t already set up and funded your retirement account for 2015, you must do so by April 18, 2016: the deadline for contributions to a traditional IRA. However, if you have a Keogh or SEP and you get a filing extension to October 17, 2016, you can wait until then to put 2015 contributions into those accounts. To start tax-free compounding as quickly as possible, however, don’t dawdle in making contributions. Making a deductible contribution will help you lower your tax bill this year. Plus, your contributions will compound tax-deferred.
To qualify for the full annual IRA deduction in 2015, you must either: 1) not be eligible to participate in a company retirement plan, or 2) if you are eligible, you must have adjusted gross income of $61,000 or less for singles, or $98,000 or less for married couples filing jointly. If you are not eligible for a company plan but your spouse is, your traditional IRA contribution is fully-deductible as long as your combined gross income does not exceed $183,000. For 2015, the maximum IRA contribution you can make is $5,500 ($6,500 if you are age 50 or older by the end of the year). For self-employed persons, the maximum annual addition to SEPs and Keoghs for 2015 is $53,000.
Itemize your Deductions
While it is easier to take the standard deduction, you may save significantly if you itemize; if you are self-employed, a homeowner or live in a high-tax area. It’s worth the trouble when the sum of your qualified expenses exceed the 2015 standard deduction of $6,300 for singles and $12,600 for married couples filing jointly. While many deductions are well known, such as those for mortgage interest and charitable donations, taxpayers sometimes overlook miscellaneous expenses, which are deductible if the combined amount adds up to more than two percent of your adjusted gross income. These deductions include job-hunting expenses, business car expenses, tax-preparation fees, and professional dues.
You can also deduct the portion of medical expenses that exceed 10% percent of your adjusted gross income.
There is a temporary exemption from Jan. 1, 2013 to Dec. 31, 2016 for individuals age 65 and older and their spouses. If you or your spouse are 65 years or older or turned 65 during the tax year you are allowed to deduct unreimbursed medical care expenses that exceed 7.5% of your adjusted gross income. The threshold remains at 7.5% of AGI for those taxpayers until Dec. 31, 2016.
Provide Taxpayer IDs on your Tax Return for Dependents
The IRS grants the personal exemption of $4,000 in 2015 for each dependent and the $1,000 child tax credit for each child under age 17.
If you are divorced, only one of you can claim your children as dependents. The $1,000 child tax credit begins to phase out at $110,000 for married couples filing jointly and at $75,000 for heads of households.
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