It’s officially summer!

Fun for time on the beach and fun making mid-year tax moves.

With five months left in the tax year, it’s the perfect time to make some tax moves that could reduce your 2017 tax bill. Here are five easy ones to take care of in July.

  1. Adjust your payroll withholding
    Did you get a big tax refund this year? Or did you owe Uncle Sam more than you expected? Either situation means that you need to reassess your payroll withholding. It’s easy to do. Just give your payroll administrator a new W-4. You should look into whether you need to adjust your withholding at the start of each year, or during a midyear tax review or any time that your personal or financial situations change.

I know that it’s tempting and easy to use payroll withholding as forced savings so you get a tax refund every year. But that’s your money that you could have been using throughout the year. And with interest rates finally creeping up, note that Uncle Sam doesn’t pay any interest on the money you let him hold onto for months.


  1. Contribute to your retirement accounts
    If your payroll withholding change means you’re getting a bit more cash each paycheck, consider putting that — and maybe more — into aretirement plan. Yes, one day you will want to quit working and you’ll be glad you saved so you can enjoy your post-work years.

The sooner you start socking away cash in your workplace 401(k) plan or (or in addition to) a Roth or traditional IRA, the sooner you can make that happen on your terms.


  1. Donate to charity
    You missed spring cleaning? No worries. Take care of it now, especially emptying out your closet of clothes you no longer want. Someone else might, like the shoppers looking for items they need at your favorite nonprofit thrift store.

Summer is a slow time for charities when it comes to contributions, but the organizations must meet the needs of those who depend on their services year round. Your midyear donations of household goods as well as clothes will be very welcome. And the gifts are just as tax deductible as long as you follow the tax code’s giving rules.


  1. Assess your investments
    The stock market is on a tear, so it’s a good time to look at how your investments have been doing. It might be time to sell some assets that have appreciated nicely.

There will be tax ramifications. But if you’re like me, you’re in a low enough tax bracket so that any investment income — qualified dividends, capital gains distributions or capital gains if you make a profit on an asset’s sale — will be taxed at a maximum 15 percent rate. Some folks won’t face any capital gains taxes at all.


  1. Set up a bunching strategy

bunching strategy will help you have enough qualified expenses to meet some of the itemized deduction thresholds. These are percentages of your adjusted gross income you must exceed to be able to deduct any of the expenses. The hurdles are 10 percent for medical costs and 2 percent for miscellaneous expenses. If you don’t exceed those percentages, all your receipt keeping and expense tracking is for naught.

A bunching strategy will help make sure that you don’t keep getting close, but never quite have enough expenses to deduct. Basically, you push or pull as many of your allowable expenses as you can into one tax year. You can, for example, delay some medical procedures so that you’ll incur them the next year when they’ll be more tax valuable. Or you can join a few more professional organizations sooner rather than later to deduct them this year. Or vice versa.


Have Tax Questions?  

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