The year end is a popular time to think about utilizing tax-saving techniques. However, it’s important to keep in mind that these techniques need to be done correctly in order to ensure savings. Here are some helpful hints to keep in mind this year end:
Many people think it wise to make all of their charitable donations in the current tax year. However, if you are taking the standard deduction for 2016, there is little use in accelerating your charitable donations to 2016 because you cannot deduct charitable gifts in a year when you take the standardized deduction. Instead, push these deductions to 2017 when you may be able to fully utilize them.
If you are considering renting out your home over the holidays, keep in mind that you do not need to pay tax on the rental income you receive if the total rental days for the year are 14 days or less. So, it is advisable to keep your rentals at 14 days or lower for the 2016 holidays.
If you are looking for a new job, you should take into consideration that those job-hunting expenses, such as outplacement agency fees, travel expenses, resume creation costs, and moving expenses for a new job at least 50 miles away from your home, may be tax-deductible, regardless of whether you do find a new job. However, there is a caveat: job seekers cannot deduct these expenses if they are looking for a job in a “new occupation,” or if there has been a “substantial break between the ending of your job and you are looking for a new one,” as the IRS has stated. Additionally, you cannot deduct these expenses if you are “looking for a job for the first time.”
Gift Tax Exclusion
Keep in mind that if you are thinking about giving a gift to someone, you can give up to $14,000 without any tax consequences. The giver does not have to file any forms or pay any taxes, as long as it is truly a gift and not simply payment for goods/services disguised as a gift. This dollar amount will remain $14,000 in 2017.