HOW TO PREVENT IDENTITY THEFT FROM AFFECTING YOU

The IRS has made great strides in protecting taxpayers from identity thieves, but you must still be diligent to protect your information.

Identity thieves can steal a taxpayer's personal information and use it to file a tax return claiming a refund under the taxpayer's name. Then when the taxpayer actually files a return, the IRS won't accept it and notifies the taxpayer that a return under his or her name and ID number has already been filed.

The IRS recommends that taxpayers should do the following in order to avoid becoming an identity theft victim:

• Guard your personal information. Identity thieves can get your information by stealing your wallet or purse, going through your trash, or posing as someone who needs your information for a legitimate reason.
• Watch out for IRS impersonators. Don't fall for phone calls, faxes, e-mails, or other contacts made by people claiming to be from the IRS. Do not respond to the message, open any attachments in an e-mail or click on any links.
• The IRS recommends that you enter "phishing" in the search box at the top of its website (www.irs.gov) to get more information on avoiding tax scams. E-mail suspected scams to phishing@irs.gov.
• Protect information on your computer. Protect your tax information with a password, and once you're finished with your tax data, take it off your hard drive.

TAX PLANNING 2017: INFLATION ADJUSTED TAX NUMBERS

Each year, certain tax figures are adjusted for inflation. While most figures are unchanged versus 2016, there is more than a 7% increase to the maximum earnings subject to social security tax. Take note of these numbers for use in your 2017 planning.

• The maximum earnings subject to social security tax in 2017 is $127,200. The earnings limit for those under full retirement age increases to $16,920 for 2017.
• The "nanny tax" threshold remains $2,000 in 2017. If you pay household employees $2,000 or more during the year, you're generally responsible for payroll taxes.
• The "kiddie tax" threshold remains $2,100 for 2017. If you have a child under the age of 19 (under age 24 for full-time students) who has more than $2,100 of unearned income, such as dividends and interest income, the excess could be taxed at your highest tax rate.
• The maximum individual retirement account (IRA) contribution you can make in 2017 remains unchanged at $5,500 if you are under age 50 and $6,500 if you are 50 or older.
• The maximum amount of wages employees can contribute to a 401(k) plan remains at $18,000, with an additional $6,000 if you are 50 or older. The 2017 maximum contribution for SIMPLE plans is $12,500 and an additional $3,000 if you are 50 or older.
• The maximum you can contribute to a health savings account in 2017 is $3,400 for individuals and $6,750 for families. The catch-up contribution if you're age 55 or older is $1,000.

A ROTH IRA CONVERSION MIGHT BE RIGHT FOR YOU

If you are single, you must make less than $132,000 to contribute to a Roth IRA for the 2016 tax year. If you are married, your combined income must be less than $194,000 in 2016. However, you can convert a traditional IRA to a Roth IRA no matter how high your income. Roth IRAs are popular because qualifying distributions are tax-free and annual distributions are not required after age 70½. A conversion to a Roth is a taxable event, so factor that into your analysis. For more information, call us at (518) 798-3330.

GRANDPARENTS CAN HELP REDUCE THE COST OF COLLEGE

A growing number of grandparents are helping raise their grandchildren. Grandparents are giving their time and money, helping with the cost of toys, clothing, education and extracurricular activities. This can add up to thousands of dollars. Many millennials indicate they could not afford their lifestyle if it were not for the help their parents provide.

While helping to support grandchildren may improve the quality of life for the grandparents, it's critical they build their own financial security first. One way for grandparents to benefit their grandchildren while protecting their own finances is contributing to a college plan. This provides a potential tax break while preparing their grandchildren for an education their parents might not be able to afford on their own.

If you would like more information on tax breaks associated with education plans, give us a call at (518) 798-3330.

WAITING ON YOUR REFUND?

The IRS processes most tax returns in 21 days for electronic filings and 6 weeks for paper returns. You can use the "Where's My Refund?" tool on IRS.gov to track the status of your return. Consider direct deposit as an option to receive your tax refund.

2017 SECTION 179 DEDUCTION

In 2017, businesses can expense up to $510,000 of qualified new or used business equipment purchases, with a $2,030,000 annual purchase limit. In addition, new equipment purchased in 2017 may qualify for 50% bonus depreciation. This rate drops to 40% in 2018, so plan your purchasing accordingly.

DO YOU NEED TO THINK ABOUT THE ALTERNATIVE MINIMUM TAX?

You may not have thought much about the alternative minimum tax, or AMT, since Congress passed a law that permanently fixed the exemption. But the tax, which you calculate separately from your regular tax liability, is still around. Here's how the AMT might apply to your 2016 tax return.

COUPLES AND MONEY: FIVE RESOLUTIONS FOR 2017

Do you have a financial plan that works for both you and your spouse? Here are suggestions that can help.

TAX BRACKET, TAX RATE, WHAT'S THE DIFFERENCE?

The difference between your tax bracket and your tax rate is more than a trick question. For example, knowing your tax rate gives you an accurate reflection of your tax liability in relation to your total income. Knowing your tax bracket is useful for planning purposes.