Get 2 tax benefits from 1 donation: Give appreciated stock instead of cash

If you’re charitably inclined, making donations is probably one of your key year-end tax planning strategies. But if you typically give cash, you may want to consider another option that provides not just one but two tax benefits: Donating long-term appreciated stock.

Read more: Get 2 tax benefits from 1 donation: Give appreciated stock instead of cash

Prepaid tuition vs. college savings: Which type of 529 plan is better?

Section 529 plans provide a tax-advantaged way to help pay for college expenses. Here are just a few of the benefits:

  • Although contributions aren’t deductible for federal purposes, plan assets can grow tax-deferred.
  • Some states offer tax incentives for contributing in the form of deductions or credits.
  • The plans usually offer high contribution limits, and there are no income limits for contributing.

Read more: Prepaid tuition vs. college savings: Which type of 529 plan is better?

Documentation is the key to business expense deductions

If you have incomplete or missing records and get audited by the IRS, your business will likely lose out on valuable deductions. Here are two recent U.S. Tax Court cases that help illustrate the rules for documenting deductions.

Read more: Documentation is the key to business expense deductions

Tax impact of investor vs. trader status

If you invest, whether you’re considered an investor or a trader can have a significant impact on your tax bill. Do you know the difference?

Read more: Tax impact of investor vs. trader status

Are frequent flyer miles ever taxable?

If you recently redeemed frequent flyer miles to treat the family to a fun summer vacation or to take your spouse on a romantic getaway, you might assume that there are no tax implications involved. And you’re probably right — but there is a chance your miles could be taxable.

Read more: Are frequent flyer miles ever taxable?

3 strategies for tax-smart giving

Giving away assets during your life will help reduce the size of your taxable estate, which is beneficial if you have a large estate that could be subject to estate taxes. For 2016, the lifetime gift and estate tax exemption is $5.45 million (twice that for married couples with proper estate planning strategies in place).

Read more: 3 strategies for tax-smart giving

Don’t roll the dice with your taxes if you gamble this year

For anyone who takes a spin at roulette, cries out “Bingo!” or engages in other wagering activities, it’s important to be familiar with the applicable tax rules. Otherwise, you could be putting yourself at risk for interest or penalties — or missing out on tax-saving opportunities.

Read more: Don’t roll the dice with your taxes if you gamble this year

Should you make a “charitable IRA rollover” in 2016?

Last year a break valued by many charitably inclined retirees was made permanent: the charitable IRA rollover. If you’re age 70½ or older, you can make direct contributions — up to $100,000 annually — from your IRA to qualified charitable organizations without owing any income tax on the distributions.

Read more: Should you make a “charitable IRA rollover” in 2016?

To deduct business losses, you may have to prove “material participation”

You can only deduct losses from an S corporation, partnership or LLC if you “materially participate” in the business. If you don’t, your losses are generally “passive” and can only be used to offset income from other passive activities. Any excess passive loss is suspended and must be carried forward to future years.

Read more: To deduct business losses, you may have to prove “material participation”

There’s still time for homeowners to save with green tax credits

The income tax credit for certain energy-efficient home improvements and equipment purchases was extended through 2016 by the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act). So, you still have time to save both energy and taxes by making these eco-friendly investments.

Read more: There’s still time for homeowners to save with green tax credits

339 West Governor Road  •  Suite 202  •  Hershey, PA 17033

Phone: (717) 533-5154  •  Toll-Free (888) 277-1040

Fax: (717) 533-1442  • info@smokersmith.com