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Individuals can employ strategies to minimize tax liability

| Dec 20, 2017 | Income Taxes

Tax planning is something that savvy Georgia residents are aware of year-round, but it becomes especially relevant at the end of the calendar year. For individuals thinking about these issues when the end of the current year approaches, there are a number of things that might be done to minimize tax liability or to take advantage of available incentives and tax breaks.

Charitable contributions, for example, are deductible for the tax year in which they are made, even if they are paid the next year. An individual who uses his or her credit card to make a donation to a qualified entity prior to Dec. 31 can take the charitable donation deduction for that tax year even if the credit card payment is made during the subsequent year. Likewise, donations made by check are deductible as long as they are in the mail by Dec. 31.

For the 2017 tax year, taxpayers can continue to make IRA contributions until April 17, 2018. This is a departure from the general rule that retirement account contributions must be made by the end of the year for which they are claimed. The limit for Roth and traditional IRAs varies based on the age of the taxpayer. For taxpayers at or over age 50, the limit for claiming a deduction is $6,500. For a “Simple IRA”, taxpayers who are at least 50 years old can claim a deduction of up to $15,500.

In a case where an individual or a couple has questions about taking advantage of available deductions as the end of the year approaches, an attorney with experience in income tax law may be able to examine the specific facts of the situation and offer recommendations to reduce tax liability. The attorney may also be able to help the client maximize retirement contributions or select a qualified charity to donate to.

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