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How To Put Your Best Foot Forward With Tax Season

| January 07, 2017
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January has always been one of my favorite times of the year. I love the feeling of a fresh start in the new year, and being proactive about putting my goals into place.

2016 certainly was a memorable year. Even with a lot of turmoil and a turbulent election year, there were positive changes. Unemployment rates are at a 43-year low (1) and the GDP output increased as well. (2) While adversity for women in the workplace continues to be present, there is an encouraging increase of women entrepreneurs and business owners. (3)

The beginning of a new year is a great time to get equipped and empowered financially. Organizing now for your taxes is a great way to set yourself up for success. Being aware of potential changes in our financial world can help you make the best decisions moving forward.

Getting Organized

While your taxes aren’t due for a few months yet, you have a lot of the information you’ll need to file already. Why procrastinate? Take some time to gather the paperwork and think through the tax deductions you’ll be eligible for. Here’s what you’ll need:

  • Social Security Number(s) for you and any dependents you’re claiming
  • Bank information and routing numbers for direct deposit
  • W-2 Forms: This form shows how much you earned from your job and how much taxes were withheld. You should receive this form from your employer(s) by January 31st
  • 1099 Forms: If you’re an independent contractor and have earned more than $600 from clients, you should receive this form with your gross earnings listed
  • Investment income information: Any information about earnings from any investments, property, income sources, or benefits
  • Income Adjustment Credits: Paperwork from homebuyer tax credits, interest paid on loans, IRA contributions and more can help reduce how much you owe and help increase your tax refund
  • Tax Deduction and Credits: Any information on tax deductions that can be made through education and childcare costs, charitable donations made throughout the year, medical expenses and more should be available as well

Know the Changes

With President-Elect Donald Trump taking office soon, there are likely to be some changes in the coming year that may affect taxes. Additionally, there are some other shifting policies that are good to be aware of as we move into a new year.

  • Tax Brackets: While we don’t know the future, reductions in individual tax rates are likely as Trump takes office. During the election season, he advocated for three income tax brackets (12%, 25%, and 33%) rather than six. (4) This means that deductions on your 2016 taxes are going to have a higher impact than they will next year when or if tax rates lower.
  • Social Security Tax Caps: Currently, there is a 6.2% tax cap for Social Security. In 2017, the maximum taxable earnings amount will increase by $8,700. It is estimated that 12 million people will increase the amount they pay into Social Security because of this change. (5)
  • Alternative Minimum Tax (AMT): This supplemental income tax was put in place to help patch up loopholes from evading taxes with deductions. As it is indexed for inflation, the AMT was raised to $54,300 for individuals and $84,500 for couples filing jointly. (6)

Be Tax Wise

While the IRS is not a perfect system, and all of the regulations and red tape can cause lots of frustration, I am a firm believer in empowering my clients to know how to best leverage the rules to manage their wealth ethically and wisely. There are deductions and tax breaks in place that can help. You just need to know where to look! Here are some of the best tricks of the trade:

  • Be Charitable: Gifting money or assets that you give to charity or loved ones can have advantages when it comes to taxes. Itemizing contributions you’ve made to qualified organizations can reduce what you owe in terms of income tax. The higher your tax bracket, the bigger the deduction can be! The IRS also offers credits and deductions when it comes to the cost of education, so if you are helping a child or grandchild pursue higher education, you can claim these expenses as well.
  • Consider Your Property: If you are a homeowner, you have some tax-deductible advantages. Use the 1098 Form your lender sends you to determine the amount of interest you paid on your home this year. Real estate taxes can also be claimed for a tax deduction. And don’t forget personal property tax on items such as cars or boats.
  • Tax Sheltered Investments: Retirement accounts, such as IRAs or 401(k)s are not taxed. Maximizing the amount you put into these funds can reduce your taxable income significantly!

Preparing for tax season can feel overwhelming, but it’s also an opportunity to reflect on the milestones and events of the past year. Each person’s story is different, and their tax situations are unique as well. With all of the different regulations and changes, it can be advantageous to get some guidance! Call me today at 858.756.0004 or email [email protected] if you would like to discuss how to start 2017 off right!

About Deb Sims

Deborah Sims is the Principal of Estate Management Group, a wealth management and financial services firm offering comprehensive and customized strategies to help her clients manage their assets and feel confident in their future. Her mission is to serve as her clients’ most trusted wealth advisor through professional knowledge, integrity, and personalized wealth management services. Based in San Diego, California, Deb’s team has offices in Rancho Santa Fe, Old Town, and Del Mar. She invites you to contact her team today to learn more about how they can help you.


(1) “Jobless Claims in U.S. Decline to Lowest Level in Four Decades.” Bloomberg.

(2) “GDP hits 2.9% in biggest gain in 2 years.” MarketWatch.

(3) “Why The Force Will Be With Women Entrepreneurs in 2016.” Forbes.

(4) “Year-End Tax Planning Strategies Due To Trump’s Election.” Forbes.  

(5) “6 Social Security Changes Coming in 2017.” U.S. News. [Accessed November 22, 2016]

(6) 9 “IRS Announces 2017 Tax Rates, Standard Deductions, Exemption Amounts, and More.” Forbes.

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