October 28, 2016
With leaves rapidly hitting the ground and the mountains being covered in white, it is time to start looking ahead to the 2016 tax compliance season. Instead of looking at it from your rearview mirror though, now is a chance to get ahead of the curve and plan for it. There are a few methods that all Oregon residents can apply to their tax situation to help reduce their Oregon tax burdens.
Oregon 529 Plan
The Oregon 529 plans are highly publicized deductions that you can see billboards and TV commercials for. How exactly do they work though? A 529 plan allows you to put money away for college with tax free growth and allows for a corresponding state income tax deduction. In 2016, a single taxpayer can deduct up to $2,310 of contributions and a married filing joint taxpayer can deduct up to $4,620. If you contribute more than that, it can be carried forward for four years. At the top of the Oregon tax brackets; this can create a tax savings of $416 with a $4,620 contribution.
Oregon Political Contribution
As we close on the 2016 elections for November 8th, you might be thinking, how can I help a cause I am partial to? Although political contributions are a disallowed deduction for your federal tax return, the state of Oregon allows a tax credit of $50 for single taxpayers and $100 tax credit for married filing joint taxpayers. Single taxpayers with federal adjusted gross income under $100,000 and married filing joint taxpayers with federal adjusted gross income under $200,000 are eligible for this credit.
Oregon Cultural Trust
The Oregon Cultural Trust is another vehicle in the state of Oregon to help cultural nonprofit organizations. Individuals can make charitable deductions to the Oregon Cultural Trust. Of the donation, up to $500 can be used as an Oregon tax credit on the Oregon tax return resulting in an after tax deduction rather than a pretax deduction. Furthermore, to qualify for the tax credit, a matching donation must be made to a qualified cultural nonprofit. Please refer to the Cultural Trust’s website, http://culturaltrust.org/, for a listing of more than 1,500 qualifying nonprofits.
With all of these tax planning tools, it is highly recommended that you meet with your CPA at SGA CPAs and Consultants to discuss them in further detail and see if they are a fit for you and your 2016 taxes.
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The IRS requires you to keep your records that support an item of income or deduction on a return until the period of limitations for that returns runs out. The period of limitations is the period of time in which you can amend your return to claim a credit or refund, or the IRS can assess additional tax.
Period of Limitations: