The end of the year is looming and with it the end of the tax year as well. Between holiday shopping, parties and travel it seems like the coming year’s taxes have been the furthest from the brain. Lucky for you, there are still steps you can take to lessen your tax burden in 2016 before 2015 is even over.
Recently, Congress passed the Protecting Americans from Tax Hikes Act of 2015, which included hundreds of tax breaks and tax extenders. On Monday’s “St. Louis on the Air,” our go-to tax expert Lance Weiss, a CPA and partner with SFW Partners, LLC, joined us to discuss those tax breaks, steps to lessen your tax burden and answered your questions about filing taxes for the coming year.
“At this point, we’re down to some of those last-minute charitable donations,” said Weiss. “There’s a real good website that the Salvation Army maintains, satruck.org, which has a donation value guide for those items of clothing, items of furniture, children furniture as we make room for new gifts in the house. One of the questions I get is ‘how much is this worth?’ and the website will help with that.”
When it comes to charitable donations, however, you must itemize in order to reap the benefit of tax deductions.
Weiss mentioned a couple of other things people can do before Dec. 31 to claim more deductions on their 2016 tax return. For example, those who are expecting a year-end bonus can ask their company’s HR department to defer the amount into a 401K account, which will not be taxed. Investing funds into a MOST fund, Missouri’s 529 College Savings Plan, also ensures the money is not taxed so long as it is used for college-related expenses when it is withdrawn.
Listeners called in with their specific tax questions on:
- Couples who have divorced
- Implications of a first child
- Affordable Care Act coverage vs. COBRA
- A Charitable Religious Trust Donation
- Changing a traditional IRA into a Roth IRA
Weiss said that the best deductions are the ones you can take from a retirement plan or IRA because you can deduct up until April 15 and still have those deductions apply to your 2015 tax return.
While these deductions and designations seem to get more complicated by the year, Weiss said we should expect another five or six years before a President would be able to successfully rewrite the tax code.
“At some point, the tax law does need a major re-write,” Weiss said. “When I started in the business, the very first year I was out we had the internal revenue code of 1954. And then, in ’86, we got the new internal revenue code and we’re still working with that base code. It seems like every 30 years or so, we’re due for a major rewrite and we need some simplification because these rules are getting crazy.”
"At some point, the tax law does need a major re-write."
Looking forward to April 2016, Weiss also cautioned those who choose to file taxes electronically or to use software to help them do so to be extra vigilant about protecting their identity.
“The identity thefts that we had happen from the last tax season were absolutely horrible,” Weiss said. “In the St. Louis area, roughly 8 or 9 percent had some sort of identity theft on their tax return.”
Additional protections that will go in place this year, such as an additional code you need to add to electronically-filed W-2, will go a long way in giving that protection, Weiss said.
"St. Louis on the Air" discusses issues and concerns facing the St. Louis area. The show is produced by Mary Edwards, Alex Heuer and Kelly Moffitt and hosted by veteran journalist Don Marsh. Follow us on Twitter and join the conversation at @STLonAir.