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Maximize tax savings, minimize filing stress [with infographic]

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Let’s face it: Taxes are a pain in the butt. 

They’ve been annoying Americans since at least the Boston Tea Party when, on a cold December night in 1773, Samuel Adams and the Sons of Liberty chucked 342 chests of perfectly good tea into the Boston Harbor. 

What gets people so riled up about taxes? Well, the obvious answer is many people believe taxes take away too much of their hard-earned income. 

Another perception stems from the difficulty and confusion associated with filing taxes. A new survey from found that 53 percent of Americans are not confident in their ability to accurately file their taxes without assistance. 

Related: What Americans really think about tax planning

According to the results, 28 percent of Americans believe it would be easier to go a week without their cellphone than to file their taxes. Almost a third of respondent’s report being unfamiliar with terms such as “standard deduction,” “exemption,” “tax credit,” and “withholding.”

“When it comes to taxes, knowledge is power and learning is continuous,” says TaxSlayer’s Director of Regulatory Affairs and Compliance, Daniel Eubanks. ”For many people, filing taxes can be stressful, but all it takes is the right planning, preparation and software to make it simple, easy and manageable. Using these three things makes it easy for anyone to file their taxes.” 

While TaxSlayer is a consumer-facing company that provides online tax preparation software for electronic filing of federal and state tax returns, its insights work well for advisors who are talking taxes with clients.

As you delve into those discussions with your clients, TaxSlayer offers these five pieces of advice that can help them organize their thoughts and their papers: 

      1. Don’t wait to file. You can begin the filing process at any time. You don’t have to wait until all your forms are in hand. 
      2. Know your forms. Visit to familiarize yourself with tax forms and terminology. 
      3. Estimate early. Use a refund calculator ahead of filing to determine whether taxes are owed. 
      4. Get personal. Be sure you have all of your own relevant income, health insurance and mortgage information, along with the full name, birthdates and social security numbers of all your dependents. 
      5. Determine deadlines. Based on your tax situation, there could be different deadlines you need to know. And remember that “Tax Day” is not always April 15. 

Tax season is a perfect time for you to reconnect with clients, develop tax-savings strategies for them, and incorporate these strategies into a comprehensive financial plan. In those meetings, here are four ways you can help them maximize their tax savings.

Maxing out on a retirement account is one of the smartest moves your clients can make. (Photo: iStock)Maxing out on a retirement account is one of the smartest moves your clients can make. (Photo: iStock)

Maximize retirement savings

Maxing out on a retirement account is one of the smartest moves your clients can make. They can start with their 401(k) plan. As a checkpoint, have them log on to their account and make sure they have maxed out their annual contributions. The max numbers for this year are $18,000 for those under 50 and $24,000 for those 50 and over.

Related: Americans are putting billions more than usual in their 401(k)s

In addition, they can deduct up to $5,500 in contributions to a traditional IRA ($6,500 if you’re 50 or over). Also, if they are self-employed, they can deduct up to $53,000 (or 25 percent of compensation) in SEP IRA contributions for 2016.

Many people fail to understand or fully maximize the benefits of an HSA. (Photo: iStock)Many people fail to understand or fully maximize the benefits of an HSA. (Photo: iStock)


Too many folks forget about the advantage of an HSA (Health Savings Account). This benefit will allow the account owner to pay current health care expenses and save on those in the future. The HSA also offers numerous tax advantages: Contributions are tax deductible; interest earned on an account is tax free; and, an account owner is able to make tax-free withdrawals on qualified medical expenses. Maximum annual contributions for 2016 are $3,350 for individuals enrolled in self-only coverage and $6,750 for individuals enrolled in family coverage.

A Roth IRA is not the right move for everyone. (Photo: iStock)A Roth IRA is not the right move for everyone. (Photo: iStock)

Roth IRAs

As an advisor, you can look at an individual’s situation, and walk that client through the benefits of a Roth IRA. You can explain to them that a Roth IRA is a retirement account where someone pays money on taxes going into their account, but then all future withdrawals are tax free. Roth contribution limits are the same as for a traditional IRA.

Related: IRS provides procedure on IRA, retirement plan rollovers

However, their income must be under certain levels to contribute. For individuals, the amount they can pay begins to phase out once they reach an annual income of $118,000 and is completely gone by $133,000. For married couples filing jointly, contribution amounts begin to phase out at $186,000 and are gone by $196,000.

Clients should be aware of how charitable contributions reduce their tax liabilities. (Photo: iStock)Clients should be aware of how charitable contributions reduce their tax liabilities. (Photo: iStock)


Charities are a way to give back to causes someone cares about. They are also a useful way to reduce tax liabilities. When working with clients, explain to them that when they make charitable contributions they need to keep records and receipts of their charitable donations. Also, before they cut a check, research the organization in question to verify that it qualifies for tax deduction status. According to the IRS, in 2016 a person may deduct up to 50 percent of their adjusted gross income, but 20 percent and 30 percent limitations apply in some cases.

Continue on for an infographic from that illustrates common American perceptions about filing taxes.

 This infographic from that illustrates common American perceptions about doing taxes.

See also:

Tax uncertainties for life settlements: 5+ troublesome issues

5 types of tax procrastinators (and a few things you should know)

15 most overlooked tax deductions

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