As the deadline for filing 2016 tax returns approaches, some taxpayers are still struggling with the rules for the 3.8% tax on “net investment income” (NII). The tax law provision authorizing this special tax was included in the Affordable Care Act (ACA), the law known as Obamacare. Although the ACA may be repealed by the new Trump administration, it would not likely be retroactive to 2016.
There is a unique tax break for business entities of all shapes and sizes contained in Section 179 of the Internal Revenue Code. Under this section, a business can elect to “expense,” or currently deduct, the cost of qualified property placed in service during the year, up to a maximum level. It is near-instant tax gratification.
There are still tax savings strategies, for tax year 2016, you can implement before the April 18th tax deadline. Two major opportunities, which I have outlined in further detail below, include contributing to a Health Savings Account, and contributing to an IRA.
The IRS pays close attention to deductions claimed for business travel expenses. Both employers and employees must meet strict recordkeeping requirements or face the consequences. Fortunately, you can obtain some relief by using IRS-approved per diem allowances in lieu of accounting for every expense. Now the IRS has updated its per diem rates for business travelers in the government’s 2017 fiscal year.
The penalty for failing to complete an IRA or a plan rollover in time can be severe. Unless you obtain a waiver from the IRS, the transfer is treated as a taxable distribution even if the failure is inadvertent. However, a new ruling provides some taxpayers with relief.