ST. LOUIS, MO (KTVI) - Sandy Furuya, financial planner at Wamhoff Financial Planning and Accounting, shares four things you can do to save on your 2016 taxes. She recommends that you start looking at your taxes as soon as possible!
- Contribute to your retirement plan, until it hurts - Your contributions are made with pre-tax dollars, meaning that you may be able to save, on average, 25% federal and 3.5%-6% state. You may contribute $18,000 annually to a 401K or $12,500 annually to a simple IRA.
- Open an employer flexible spending plan - The money you put into these plans is pre-tax, which will save you social security, medicare, federal and state taxes. These plans are a wise choice if you have anticipated out-of-pocket health expenses or dependent care expenses. Keep in mind that you must use these funds within a certain period of time, or you lose them.
- Increase your non-cash charitable contributions - Instead of dropping those clothes, household items, and toys at the 'box' on the corner, give to a charity that provides a charity receipt. You will need to do the legwork to document what was donated, the value, and date of donation.
- Harvest your losses - Review your portfolio with your financial adviser towards the end of the year, every year. If you've sold any investments at a loss, you may be able to harvest those losses against any gains that have occurred in your portfolio. Depending on your situation, this could result in significant tax savings.
Learn more about how to save on your 2016 taxes at wamhoff.com