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14 tips for this year’s tax season

The deadline for filing your federal tax return is a couple of days later this year, April 18th, but you should be getting your paperwork ready. Paul Schatz, Pr...
IRS Tax Form 1040

The deadline for filing your federal tax return is a couple of days later this year, April 18th, but you should be getting your paperwork ready. Paul Schatz, President, Heritage Capital LLC joined FOX 61 Good Day Connecticut to share some tips.

  • DIY versus Professional – To begin tax season, you need to decide if you are doing it yourself or using a professional tax preparer. If the latter, don’t wait too much longer.
  • Need more time – The IRS automatically grants a 6 month extension to anyone who requests. However, if you owe taxes, they must still be paid by April 18.
  • Same sex couples – This is likely the first year where same-sex couples in all 50 states can file joint returns.
  • HSA – Health Savings Account. You can contribute and deduct up to $3350 for a single plan and $6650 for a family plan. Plus, you can contribute another $1000 if you are over age 50. This money does not have to be used each year and may accumulate.
  • 2016 – By the time tax day rolls around, the year will be a little more than ¼ over. After scrambling around to complete your 2015 taxes, why not be proactive and start planning now. With financial markets under pressure, start to dollar cost average your 2016 IRA contributions. It’s also a great time to review your 401K account. See if you can increase the amount taken out of your paycheck Review your 401K holdings and make sure to rebalance the account as it’s likely out of whack given the stock market’s tumultuous first quarter.
  • There were no major tax law changes for tax year 2015. That should not make this year more complex.
  • 3 Days longer – Due to Emancipation Day in DC, the tax filing deadline has been moved to April 18 for 2016. (Massachusetts and Maine are April 19.)
  • Help – For those DIY’ers, the IRS has phones staffed with people to answer your questions. Just budget a few hours of time since hold times get longer and longer as April 18 approaches.
  • Filing status – Run the various scenarios to determine the best tax filing status for your family. Married filing jointly. Head of Household. Single. Married filing Separately.
  • Estimated Taxes – Make sure you have paid 100% of last year’s tax liability or at least 90% of 2015s or be subject to penalties and interest.
  • Use the float – If you expect a refund and are eligible to add money to your IRA, file your taxes early deducting the IRA contribution, but use the refund check to actually fund the IRA by April 18.
  • Tax Deduction – If you are under the age of 70 ½ and have earned income in 2015, you may be eligible to contribute up to $5500 in an IRA or $6500 if you are over the age of 50.
  • ROTH IRA – Although not tax-deductible certain people are eligible to contribute $5500 or $6500 to a ROTH IRA with after tax dollars and have that money grow and withdraw tax free. You can also leave to your heirs.
  • SEP-IRAs may also be contributed to and deductible by April 18 with a maximum amount of $53,000. Unlike regular IRAs and 401Ks, there is no “catch up provision” for earners over 50 years old.