Tax planning is ultimately about proper wealth management. Given the complexity of federal and state income tax law, along with its ever-changing nature, you are faced with a seemingly insurmountable task of staying on top of it all. The following tax planning checklist for 2016 is your guide for ensuring you meet all deadlines as well as federal and state regulations.
Q1 - January to March 2016
- There is still time to organize your records for your tax preparation. Good organization will provide for a best possible outcome for preparation and future planning.
- Partnership returns due March 15, a change from prior years.
- S Corporation returns due March 15.
Q2 - April to June 2016
April 1:
- Did you reach 70 1/2 in 2015? If so, then this is your deadline to take your first required minimum distribution (RMD) from your traditional IRA.
April 18:
- Deadline to file your 2015 individual federal and state income tax returns this year. This is the extension filing date as well.
- Payment date for your first quarter 2016 individual estimated income taxes for federal and possibly your state.
- Deadline for making your 2015 contributions to traditional IRAs, Roth IRAs, Education Savings Accounts (ESAs), and/or Health Savings Accounts (HSAs).
- Establishment and funding of SEP plans for your sole proprietorship or a partnership. If you are filing an extension for your tax return, it will extend your timing of the establishment and funding of your SEP as well.
- Calendar year C Corporation returns are due; a change from prior years.
June 15:
- Payment date for your second quarter 2016 individual estimated income taxes for federal and possibly your state.
Q3 - July to September 2016
- Time for you to schedule a mid-year meeting with your financial planner, wealth advisor, attorney, insurance specialist, and your tax preparer. Part of the agenda may include any income tax changes that may affect you in your current tax or estate tax planning.
- Are there changes in your portfolio that are needed for tax planning purposes?
- Have you had any significant changes in your life that may affect your financial or tax management?
- Are your beneficiary designations up to date?
- Or maybe most importantly, have any of your life-goals changed?
- Consider setting up a Simple IRA for your company. You have from January 1 to October 1 to set up a new Simple IRA.
September 15:
- Payment date for your third quarter 2016 individual estimated income taxes for federal and possibly your state.
Q4 - October to December 2016
- Think about the tax planning of events needed to maximize the tax benefits pertaining to your investments.
- Is it time to recognize loss on a stock transaction to offset some gains?
- Do you have any capital loss carryovers from prior years that will come into play in this year?
- Is it time to consider opening a 529 plan for your children, grandchildren, or perhaps a friend's child or grandchild? The account must be opened and contributions made by the last day of the year.
- Gifting. Do you have a plan to gift to your children or other loved ones? You can give $14,000 a year to anyone you want, without any tax consequences.
- Charitable giving. Have you given to your favorite charities? Is there any more planning that needs to be done?
- If you own a business, have you considered setting up an FSA for your employees to contribute to?
- Offering this during your company's open enrollment period might be good timing.
- Annual open enrollment period for Medicare starts mid-October and ends in early December. If this applies to you and you didn't discuss this during your summer meeting with your advisors, pick up the phone and get a new conversation started.
- Think about the need to accelerate deductions or to delay income into 2017. Perhaps next year you will be in a lower tax bracket, and receiving a bonus for 2016 in 2017 would result in tax savings for you. And if, for example, you are going to exceed the minimum needed for a medical deduction this year, timely payment now for all medical bills outstanding would result in a larger deduction in 2016.
October 17:
- Deadline to file 2015 individual federal income tax returns through automatic extension.
November 30:
- Deadline to determine if the "wash sale" rules are going to apply to you. This rule pertains to the buying and selling of substantially identical securities within 30 days. The rule disallows losses if this occurs.
December 30:
- Deadline to sell securities in order to recognize a loss for the 2016 tax year.
- Last day to complete your gifting to family and charitable organizations.
- Deadline to complete Roth IRA conversions.
- Last day to take required minimum distributions (RMDs) from traditional IRAs and most other qualified plans if you reached age 70 1/2 before 2016. Talk to your tax advisor about these calculations and amounts, as this can be quite complex.
- Payment of all bills that will result in additional tax deductions for 2016. Payment can be made by credit card charges as well as cash or check.
January 16, 2017:
- Payment date for your fourth quarter 2016 individual estimated federal income tax and possibly your state as well.