Year-End Tax Planning Strategies for Individuals Part 3

Health Care Law

If you haven’t signed up for health insurance this year, do so now and avoid or reduce any penalty you might be subject to. Depending on your income, you may be able to claim the premium tax credit that reduces your premium payment or reduces your tax obligations, as long as you meet certain requirements. You can choose to get the credit immediately or receive it as a refund when you file your taxes next spring. Please contact the BASC tax preparation Gilbert office if you need assistance with this.

Additional Medicare Tax

Taxpayers whose income exceeds certain threshold amounts ($200,000 single filers and $250,000 married filing jointly) are liable for an additional Medicare tax of 0.9 percent on their tax returns, but may request that their employers withhold additional income tax from their pay to be applied against their tax liability when filing their 2017 tax return next April.

High net worth individuals should consider contributing to Roth IRAs and 401(k) because distributions are not subject to the Medicare Tax.

If you’re a taxpayer close to the threshold for the Medicare Tax, it might make sense to switch Roth retirement contributions to a traditional IRA plan, thereby avoiding the 3.8 percent Net Investment Income Tax (NIIT) as well (more about the NIIT below). The tax preparation Gilbert team can assist you with any questions you may have.

Alternate Minimum Tax

The Alternative Minimum Tax (AMT) exemption “patch,” which was made permanent by the American Taxpayer Relief Act (ATRA) of 2012, is indexed for inflation and it’s important not to overlook the effect of any year-end planning moves on the AMT for 2017 and 2018.

Items that may affect AMT include deductions for state property taxes and state income taxes, miscellaneous itemized deductions, and personal exemptions. Please call if you’re not sure whether AMT applies to you. If you are not sure if this applies to you contact tax preparation Gilbert team at BASC Expertise and they can help.

Note: AMT exemption amounts for 2017 are as follows:

$54,300 for single and head of household filers,
$84,500 for married people filing jointly and for qualifying widows or widowers,
$42,250 for married people filing separately.

To assistance with your year end tax planning needs contact BASC Expertise tax preparation Gilbert for assistance.