4 Ways to Reduce Your Tax Liability Before the New Year

2016 is winding down to a close, and we have just a few months left before we ring in the New Year.

With most of this year gone, it may seem like there is little you can do to lower your taxes for filing

season next year. There are some strategies, which can still be implemented, however, even during the

final quarter of the year.

Here are four ways you can reduce your 2016 tax liability resulting in a better financial position next

April:

Make Extra Retirement Account Contributions

If you have retirement accounts (such as IRAs and 401ks) where in your contributions are pre-tax, now

might be a good time to try and maximize those contributions. Any dollar you are able to put into your

pre-tax retirement savings account is a dollar that is deferred from being taxed. This could make a

bigger difference than you may think especially if a reduction in taxable income puts you into a lower

tax bracket.

The IRS allows you to donate a very generous percentage of your income to charity (in many cases up

to 50%). However, as we get closer to the holidays, budgets tend to become much tighter, and it

becomes more difficult to make charitable contributions. This makes fall a perfect time to send some

extra (tax-deductible) donations to your favorite charity. And remember, you can also deduct the fair

value of non-cash items (such as clothing and toys) you give to charity. Just be sure to get a receipt so

you have full documentation in the event of greater scrutiny down the road.

In recent years, the government has provided numerous tax incentives for those who want to make

their homes more energy efficient. For example, you can receive up to a 30% tax credit on the

purchase of certain alternative energy equipment. This includes geothermal heating and cooling

systems, solar panels, small windmills, and fuel cells. There are also smaller credits available for

certain types of windows, doors, roofing and insulation materials, depending on the manufacturer.

These credits may not be around forever, so if you are considering making any of these upgrades, there

is no better time than the present.

If you have been thinking of becoming an entrepreneur, fall is the perfect time to get started. With

summer over and the kids back in school, you have several months to establish a new working routine.

There will be an interruption for the holidays, but there is still time to get established before then.

Another advantage to starting now is you can open yourself up to a myriad of additional tax

deductions. For example, a home business allows you to take a deduction for your home office, office

equipment and supplies, marketing/advertising, business mileage, business-related transportation and

lodging expenses, 50% of business meals and entertainment, and many others. To find out which of

these deductions might apply to the home business you are thinking of starting, speak with your local accounting firm.