Quick tips For 2017 Tax Season 

  • Put your tax return on extension if you face any ACA penalties – it’s quite likely you won’t have to pay them.
  • Send change of address notices to all former employers and vendors and accounts if you moved last year – to ensure you get all your paperwork.
  • Get receipts for all your donations (especially for donations of $250 or more) immediately – you must have the receipts before you file your tax return.
  • Health Savings Arrangement (HSA) tip for 2016 and 2017 – Contributions to these Health Savings Accounts are deductible on the front page of your tax return (“above the line”), so these deductions are very beneficial. They allow you to reduce your adjusted gross income (AGI), which affects most tax credits, many deductions and other benefits. When you make contributions to HSAs, you can draw the money out to pay medical expenses. The fund gives you something like a debit card. You can use that to pay doctors, pharmacists, etc. Be careful. When you use that card to pay non-medical expenses (like to buy lipstick at the pharmacy when you pick up your meds), you pay taxes and penalties for drawing that money.

Instead of a family plan for a married couple without children (contribution limit of $6,750), consider these options to allow you to make higher contributions. Remember, the money you use to fund your HSA can be left in the account, earning interest or dividends like an IRA, to be used for future medical expenses (but not to pay for health insurance).

a. You can fund two individual HSAs of $3,350 each + $1000 each for over 55. You may fund 2016 until April 18, 2017. That gives your household a total of              $6,800 (or $8,800 if both are age 55 or over), instead of $6,750 (or $7,750 if age 55 or older)

b. OR if you have children – You can set up a personal plan for one parent and a family plan that covers the rest of the family. That would allow you to fund the         HSAs up to – $10,100 ($6,750 + $3,350) + $1000 each for the family plan and the personal HSA for parents age 55 or over.

c. Remember, this plan means your health insurance coverage has a higher deductible. But for people and families that are healthy, this won’t be a problem.               You can find a good chart over here – http://www.hsabank.com/hsabank/education/irs-guidelines-and-eligible-expenses

d. And if you don’t draw money from the plan to pay medical expenses, you might be able to deduct the medical expenses as itemized deductions. So you get a           double benefit – above the line deduction for the contribution – and itemized deductions.

  • Write down your odometer reading today – and take a picture (if you haven’t already done this on January first)
  • Businesses – must send out 1099s and W-2s by 1/31.
  • Businesses – don’t rely on 1099s – get your accounting done yourself.
  • Partnership returns are due a month early, on March 15th, not in April

Eva Rosenberg EA,
MBA, known as the Internet’s TaxMama, is author of the new book by McGraw-Hill, Small Business Taxes Made Easy and an enrolled agent with more than 25 years of experience. A MarketWatch Columnist, she runs TaxMama.com where individuals and small business owners can get free answers to their tax questions. You can find also her on Twitter @Taxmama.