Yes, there is still time to maximize your tax benefit in 2016

If you’re one of the many people expecting the new administration to enact tax cuts next year, you still have time to maximize tax benefits before the end of the year.

Julie Welch, shareholder and director of taxation at Meara Welch Browne PC in Leawood, shared several tips:

• Speed up the purchase of equipment you’ll need to buy in 2017 anyway. Businesses typically can deduct as much as $500,000 of their equipment purchases, as long as they have taxable income.

So if you’re going to buy a piece of equipment anyway, why not buy it now and use the deduction to lower your 2016 taxes, instead of next year when the rates probably will be lower?

• Donate stocks to charity. If you bought stock more than a year ago, and it’s generated huge gains, you can donate it to charity and deduct the full value of it without having to pay taxes on the capital gain.

• Double up on your charitable giving benefits by contributing to organizations covered by state tax credits, and improve your neighborhood at the same time.

“For example, Missouri has the Neighborhood Assistance Tax Credits and the Youth Opportunity Credit,” Welch said. “Those programs give you your normal federal tax deduction, and then you get a 50 percent credit on your state tax return. … So if you give $1,000, you get your normal tax deduction that saves you on your federal tax rate, plus then you get a $500 credit on your state taxes.”

• Accelerate your deductions for this year. Look at the expenses you’re going to pay anyway in January, and move them into December. For instance, you’re going to pay rent and insurance premiums in January anyway, so why not get the deduction this year when rates most likely are higher, rather than next year when they probably will be lower.

• Don’t jump the gun and switch your S-corp to a C-corp, thinking tax rates will be lower. Wait to be sure of the consequences.

“If you switch to a C-corp, you can’t switch back to S-corp status for five years,” Welch said. “So if something doesn’t happen, or it isn’t what you expected, you’d be stuck. Also, Missouri likely has new tax cuts coming up in 2017 that will help flow-through entities. So maybe you don’t want to switch to a C-corp at all.”