Last Minute 2016 Tax Tips

Provided by Angel McCall CFP®

Filing Deadline – Monday, April 18, 2017

Reclaim a Social Security Overpayment – Changing jobs in 2016 and making more than $118,500 for year could mean that you overpaid Social Security tax. Employees were assessed 6.2% on pay up to $118,500, but if you changed jobs during the year, your new employer started the counter at zero regardless of how much you already earned. Document the overpayment on line 71 of your Form 1040.

Contribute to an IRA or Roth IRA before Monday 4/18/17 – However, most financial institutions require that contribution by Friday, 4/15/17. If you have not yet contributed to your IRA, it may be better to contribute to a Roth IRA instead. A tax deduction is not worth a lot if you are in a low tax bracket and the Roth will have tax-free growth.

Also, you may be eligible for a tax credit for your contribution.

Did your child have income? Contribute to a Roth IRA for them. (Watch for an extensive article on this topic in a future newsletter.)


Retirement Savings Contributions Credit (Saver’s Credit)

You may be able to take a tax credit for making eligible contributions to your IRA or employer-sponsored retirement plan.

Who's eligible for the credit?

You're eligible for the credit if you're:

1. Age 18 or older;

2. Not a full-time student; and

3. Not claimed as a dependent on another person’s return.

See the instructions for Form 8880, Credit for Qualified Retirement Savings Contributions, for the definition of a full-time student.

Amount of the credit

The amount of the credit is 50%, 20% or 10% of your retirement plan or IRA contributions up to $2,000 ($4,000 if married filing jointly), depending on your adjusted gross income (reported on your Form 1040 or 1040A). Use the chart below to calculate your credit.

*Single, married filing separately, or qualifying widow(er)

Retirement savings eligible for the credit

The Saver’s Credit can be taken for your contributions to a traditional or Roth IRA; your 401(k), SIMPLE IRA, SARSEP, 403(b), 501(c)(18) or governmental 457(b) plan; and your voluntary after-tax employee contributions to your qualified retirement and 403(b) plans.