Tax time is coming up fast. Unfortunately many individuals may yet again be disappointed as their anticipated savings fail to lower their tax bills. But there is one tax break that almost half of all New Yorkers may qualify for.
As the countdown to April 15th gathers steam we’ll hear more and more pitches for ways to spend money and get tax breaks. Sadly many of them consistently fail to deliver. Why is that? How can New Yorkers get a real break on their taxes this year?
We’ve all heard the promises of property tax rebate checks, and rumors of a growing economy. Yet, many will find all of their tax bills are up in 2016. Most are not earning substantially more money, and that means needing to find more ways to cut taxes.
There are many potential breaks floated out there by marketers, but make sure you know the math and real net benefit, or lack of it, before pulling out your wallet…
Charitable Donations
It’s great to give to charity. Yet, donating cars and other goods doesn’t always end up providing donors with bigger income tax rebate checks.
Buy Real Estate
Buying a home and investing in property can be a smart move. Marketers often herald the tax benefits of real estate as a reason to make the leap. Yet, those that are not itemizing deductions may not find net savings. Make sure you know all the costs and if you will qualify to write off any related expenses first.
IRA Contributions
IRAs and in particular self-directed IRAs are being proclaimed as a big tax saving secret. Again there are many quirks and potholes here. These investment vehicles can be especially prone to audit by the IRS, and the tax savings can be eliminated if investors are not extremely careful about how funds are handled and assets are managed.
Becoming Self-Employed
Get rich quick gurus love painting becoming self-employed as a way to kick the tax man to the curb and keep more of your earnings. It doesn’t always work out this way on April 15th. Many breaks do not reduce taxes for the self-employed due to having to pay self-employment taxes. Some will end up with huge tax bills in 2016.
Healthcare Coverage
Healthcare can be a painful catch 22 when it comes to your wallet. If you don’t have it you’ll be fined by the IRS. However, many plan options mean shelling out thousands of dollars a year, for very little coverage, and perhaps no net tax savings. Do the math carefully.
Gambling Losses
This should be self-explanatory. US News reports gambling losses as one of the 7 Most Missed Tax Deductions and Credits. It’s worth looking into, but don’t expect the IRS to write you a check and bail you out for playing badly in Atlantic City all year.
Find Real Tax Savings
The good news is that many New York property owners can save substantial sums each year by grieving their property tax bills. Almost half will receive incorrect bills each year. Appeal these bills and request they be reduced and you could save thousands, without having to get overly creative, or suffering the frustration of some of the above ‘breaks’.
Summary
Talk to your accountant before making any financial moves. Have them explain the math and if you’ll see a real reduction or not. Make a tax plan for the next year. Then grieve your property tax bill and find some real savings