Accelerating Deductions into 2016

accelerating-deductionsIf you expect a decrease in income next year, accelerating deductions into the current year can offset the higher income this year. Some options include:

1) Prepaying property taxes in December.

2) Making January mortgage payment in December.

3) If you owe state income taxes, making up any shortfall in December rather than waiting until the return is due.

4) Since medical expenses are deductible only to the extent they exceed 10 percent (7.5 percent for individuals age 65 before the end of the year) of adjusted gross income, bunching large medical bills not covered by insurance into one year to help overcome this threshold.

5) Making any large charitable contributions in 2016, rather than 2017.

6) Selling some or all loss stocks.

7) If you qualify for a health savings account, setting one up and making the maximum contribution allowable.

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About cozbycpa

Heather L. Cozby is a CPA on the South Shore and Cape Cod. The managing partner of Cozby & Company, LLC, Heather has the resources and experience necessary to provide quality professional services on a timely basis and at a reasonable cost. She specializes in tax planning & preparation; audit, review & compilation services; management advisory services; bookkeeping; and accounting. Her unique niche is in working with homeowners’ associations and condominium trusts, advising with rental real estate, and providing outsourced financial consulting for mid-sized companies. She is more entrepreneurial than most accountants, and offers the best of both worlds - providing the services of a larger firm while retaining the ability to connect with her clients on a personal level.
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