3 ways to help reduce next years tax bill.

By far, the best way to lower your taxes is to save more for your retirement. Not only do you get a lower tax bill now, you're also creating your own financial security in the process.

Saving money in tax-deferred retirement accounts such as a traditional IRA or 401(k) can reduce your taxable income by quite a bit. You could qualify for up to $5,500 in tax-deferred contributions to a traditional IRA for the 2016 tax year, and an additional $1,000 if you're 50 or older.

There are several tax breaks that come along with homeownership, and they can combine to save you a good chunk of money on your taxes. These include:

Mortgage interest
Mortgage insurance premiums
Property taxes
"Points" you pay to obtain a mortgage
The most widely known benefit is the mortgage interest deduction. If you itemize deductions on your tax return, you can write off the interest you pay on mortgage debt on a first and second home, on up to $1 million in original mortgage balances. In addition to the interest, you can also include any mortgage insurance premiums you're required to pay.

Another great way to save on your taxes is to contribute to causes near and dear to you. The IRS lets itemizers deduct donations to qualified non-profit organizations and charities, including cash donations as well as property.

Keep in mind you'll need to be able to document your donations, and the documentation requirements are stricter for higher-valued donations. For example, a simple receipt with the charity's name is just fine for property valued at less than $250. However, if you donate say, a car or boat worth more than $5,000, a professional appraisal is required.

These three things can trim thousands of dollars off your tax bill, but the benefits don't stop there. By aggressively saving and investing for retirement, you can help ensure your own financial security later in life. Buying a home can lock in your housing payment, while all of your rent-paying friends watch theirs increase every year. And finally, charitable giving can benefit organizations and people in need in infinite possible ways.

Courtesy of USAToday

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Tax Breaks for the Military

If you are in the U. S. Armed Forces, there are special tax breaks for you. For example, some types of pay are not taxable. Certain rules apply to deductions or credits that you may be able to claim that can lower your tax. In some cases, you may get more time to file your tax return. You may also get more time to pay your income tax. Here are some tips to keep in mind:

Deadline Extensions.  Some members of the military, such as those who serve in a combat zone, can postpone some tax deadlines.
Combat Pay Exclusion.  If you serve in a combat zone, your combat pay is partially or fully tax-free.
Moving Expense Deduction.  You may be able to deduct some of your unreimbursed moving costs on Form 3903.
Earned Income Tax Credit or EITC.  If you get nontaxable combat pay, you may choose to include it in your taxable income. Including it may boost your EITC, meaning you may owe less tax and could get a larger refund.
Signing Joint Returns.  Both spouses normally must sign a joint income tax return. If your spouse is absent due to certain military duty or conditions, you may be able to sign for your spouse.
Reservists’ Travel Deduction.  Reservists whose reserve-related duties take them more than 100 miles away from home can deduct their unreimbursed travel expenses on Form 2106, even if they do not itemize their deductions.
Uniform Deduction.  You can deduct the costs of certain uniforms that you can’t wear while off duty.
ROTC Allowances.  Some amounts paid to ROTC students in advanced training are not taxable.
Civilian Life.  If you leave the military and look for work, you may be able to deduct some job search expenses.
Tax Help.  Most military bases offer free tax preparation and filing assistance during the tax filing season.

Courtesy of IRS

For more information contact Neikirk, Mahoney and Smith at 502-896-2999

Summer camp may be tax deductible

Expenses associated with summer camp may result in a tax break in the form of the child care credit so long as they are work-related. There are, however, some rules and restrictions for claiming summer camp expenses on your taxes:

Overnight camp is fun for the parents but doesn’t qualify for the credit.

Chess camp might be okay. The cost of sending your child to a day camp may be a qualifying expense, even if the camp specializes in a particular activity.

The forms matter. To claim a credit for child care expenses, you’ll need to attach a federal form 2441 to a federal form 1040, federal form 1040A, or form 1040NR.

Stay at home and unemployed spouses make you ineligible for the credit.

Some of the expenses involved in simply getting ready for camp are deductible. That includes physicals (you do not have to be sick for a physical or well exam to be deductible); shots (vaccines and immunizations are considered preventative care and are deductible); and fees for doctors to complete forms for camp.

Courtesy of Forbes

For more information contact Neikirk, Mahoney and Smith at 502-896-2999