By Ryan Velez
The tax filing deadline is nearly upon us, and depending on your finances, this may be a time of year. Seeing as 2016 was an election year, there weren’t a number of shifts to the tax code, and while this is likely to change this year, for this set of taxes, that is one thing you can take heart in. The Network Journal has recently put together a list of potential tips to help you cut down on your taxes even now, with the deadline nearly here.
For one thing, due to a technicality, you have a few days extra time if you are a procrastinator. Since April 15 falls on a Saturday this year and April 17 is a holiday in Washington, D.C., you have until Tuesday, April 18, to file your federal tax return. However, you want to try and file as early as you can to avoid potential identity theft. When it comes to savings, one of the best options is contributing to an IRA. If you’re not enrolled in a 401(k) or other workplace retirement plan, you can deduct an IRA contribution of up to $5,500 ($6,500 if you’re 50 or older), no matter how high your income. You still have until April 18th to do this. Those who are self-employed can take this to an even further level, contributing up to 20% of your net self-employment income (business income minus half of your self-employment tax) to a SEP-IRA, up to a maximum of $53,000.
Parent of college students can take advantage of the American Opportunity tax credit, worth up to $2,500 per eligible student for the first four years of college. To use this, you need a Form 1098-T from the student’s school. Make sure that you have the school’s employer identification number, and report the amount that you paid, not what you were billed.
While President Trump has pledged to repeal the ACA, this doesn’t affect your 2016 returns. Be sure to avoid a penalty by having proof that you had qualifying health insurance in 2016 or were eligible for an exemption. If you bought health insurance through one of the exchanges set up by the Affordable Care Act, you should have received IRS Form 1095-A. Use the information here to fill out Form 8962, which is used to determine your subsidy based on the estimate you provided of your 2016 income. The penalty for being uninsured for all or part of the year is $695 per adult and $347.50 per child or 2.5% of household income above the income level that triggers the need to file a return, whichever is higher.