Saving you money: Last-minute tax tips

HARTFORD — With Tax Day (April 18) approaching fast, there are a number of tax credits and deductions that could lead to savings! Andrew Lattimer with BlumShapiro joined FOX61 News at 5 Monday to talk about some tips.

The current tax code, both at the federal and state level, is filled with possibilities for potential savings; people simply need to be aware they are there. On the federal side, there is a good chance things may change dramatically next year. President Trump is pledging to overhaul the tax code and propose substantial changes such as condensing tax brackets, eliminating the estate tax, eliminating the Alternate Minimum Tax and reducing the corporate tax rate.

Federal Taxes

Businesses

  • Accelerated Depreciation – Businesses should make it a priority to take advantage of accelerated depreciation, both through Internal Revenue Code (IRC) Section 179—which allows for an expensing of certain asset purchases—and the 50% bonus depreciation; both could lead to ample tax savings.
  • Additionally, this section of the tax code could be enhanced next year – President Trump has proposed enhancing, possibly even doubling, the small business deduction next year.
  • Pension Plans – Businesses should make sure payments are made to pension plans prior to filing of their 2016 tax returns in order to get the deduction in 2016.
  • Sometimes a common mistake occurs when people wait until after the filing to make the payment, which results in the deduction no longer being valid that tax year.
  • Manufacturing and Construction – Businesses should take advantage of Internal Revenue Code Section 199, which allows for:
    • Research and Development (R&D) Tax Credit
    • Work Opportunity Tax Credit
    • Deduction of domestic production activities.

Individuals

  • College and Day Care – Two very critical deductions could save people some money:
    • Deduction for college tuition
    • Deduction for day care expenses
  • IRAs – People should be sure to make all IRA and Roth IRA contributions prior to April 18th in order to get the full deduction benefit in 2016.
  • Other Tax Deductions are available for:
    • Health Savings Account contributions made before April 18
    • Non-cash charitable contributions
    • Cash charitable contributions – a reminder that if more than $250 is given to a qualified organization, you should obtain a letter from the organization
    • Teacher expenses – up to $250 is deductible

State Taxes

  • CHET Accounts – Contributions made by parents or relatives to a child’s Connecticut Higher Education Trust (CHET) account up to $10,000 are tax deductible
  • Military Retirement Pay – deductible
  • Teacher Retirement Pay – deductible