<< Back to Member's Home




2017 Tax Tips

Date: 10/1/2017

Author: Tax Hotline


If you’re looking to save money on your taxes this year, consider using one or more of these tax-saving strategies to reduce your income, lower your tax bracket, and minimize your tax bill.

1. Max out your 401(k) or contribute to an IRA. If you have income from wages or self-employment income, you can also build tax-sheltered investments by contributing to a traditional (pre-tax contributions) or a Roth IRA (after-tax contributions). You may also be able to contribute to a spousal IRA even when your spouse has little or no earned income.

2. Take advantage of employer benefit plans such as Flexible Spending Accounts (FSAs) or Health Spending Accounts (HSAs). Medical and dental expenses are generally only deductible to the extent they exceed 10 percent of your adjusted gross income (AGI). For most individuals, particularly those with high income, this eliminates the possibility for a deduction. However, you can effectively get a deduction for these items if your employer offers a FSA (sometimes called a cafeteria plan) or HSA.

3. Bunch your itemized deductions. Certain itemized deductions, such as medical or employment-related expenses, are only deductible if they exceed a certain amount. It may be advantageous to delay payments in one year and prepay them in the next year to bunch the expenses in one year.

4. Use the gift-tax exclusion to shift income. In 2017, you can give away $14,000 ($28,000 if joined by a spouse) per donee, per year without paying federal gift tax. And, you can give $14,000 to as many donees as you like. The income on these transfers will then be taxed at the donee’s tax rate, which is in many cases lower. Note: Special rules apply to children under age 18. Also, if you directly pay the medical or educational expenses of the donee, such gifts will not be subject to gift tax.

5. For gift tax purposes, contributions to Qualified Tuition Programs (Section 529) are treated as completed gifts even though the account owner has the right to withdraw them. As such, they qualify for the up-to-$14,000 annual gift tax exclusion in 2017. One contributing more than $14,000 may elect to treat the gift as made in equal installments over the year of gift and the following four years so that up to $56,000 can be given tax-free in the first year.

6. Consider tax-exempt municipal bonds. Interest on state or local municipal bonds is generally exempt from federal income tax and from tax by the issuing state or locality. For that reason, interest paid on such bonds is somewhat less than that paid on commercial bonds of comparable quality. However, for individuals in higher brackets, the interest from municipal bonds will often be greater than from higher paying commercial bonds after reduction for taxes. Gain on sale of municipal bonds is taxable, and loss is deductible.

7. Give appreciated assets to charity. If you’re planning to make a charitable gift, it generally makes more sense to give appreciated long-term capital assets to the charity, instead of selling the assets and giving the charity the after-tax proceeds. Donating the assets instead of the cash prevents your having to pay capital gains tax on the sale, which can result in considerable savings, depending on your tax bracket and the amount of tax that would be due on the sale. Additionally, you can obtain a tax deduction for the fair market value of the property. Many taxpayers also give depreciated assets to charity. Deduction is for fair market value; no loss deduction is allowed for depreciation in value of a personal asset.

8. Taxpayers age 70 1/2 and older can take advantage of tax benefits associated with Qualified Charitable Distributions (QCDs)--IRA withdrawals that are transferred directly to a qualified charitable organization.

9. Keep track of mileage driven for medical or charitable purposes. For 2017, it’s 17 cents for medical and moving purposes and 14 cents for service for charitable organizations.

© 2017 International Administrative Services, Inc. All rights reserved.