(208) 666-1065  ph
(208) 667-4930 fax

302 E. Linden Ave. | Ste. 101
Coeur d'Alene, Idaho 83814
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Dear Valued Clients –

As 2016 winds down, there is still some time to reduce your 2016 tax bill. Our letter highlights several potential tax-savings opportunities for businesses and individuals in 2016. We are also providing you with a blank organizer to assist you in compiling and organizing your tax information.


• New dependents, including Social Security Number.
• Report all income and bring all W-2’s and 1099 forms to your tax interview.
• If sold stock in 2016, please bring the broker’s 1099-B statement (when received).


• Schedule of invoices for new asset equipment purchases, including new vehicle or equipment contracts.
• Year-end bank statements, credit card statements, loan statements.
• QuickBooks backup along with printed copies of your year-end Balance Sheet & Income Statement.

a. If no QuickBooks backup, then a summary of income and expenses for the year end.

• Copies of payroll reporting such as W-3 & W-2’s that were filed, along with applicable year end state payroll reports.
• New lease agreements.
• Purchase and Sale agreements if bought or sold a business during 2016.

Our 2016 tax organizer is enclosed separately to assist you in the gathering of your tax information for your 2016 tax reporting.

Your tax appointment has been pre-scheduled for you. Please take note of the day, date, and time as shown on your tax organizer. If you’re unable to keep this appointment, please advise our appointment secretary as soon as possible by calling our office to reschedule, 208.666.1065.

We value and sincerely appreciate your continued trust, loyalty, confidence, and referrals. We look forward to providing our best tax solutions and professional service to you during this filing season.

Most Sincerely,
Clovis & Associates, LLC

NUMBERS YOU NEED TO KNOW: Because many tax benefits are tied to or limited by adjusted gross income (AGI)- IRA deductions, for example—a key aspect of tax planning is to estimate both your 2016 and 2017 AGI. Also, when considering whether to accelerate or defer income or deductions, you should be aware of the impact this action may have on your AGI and your ability to maximize itemized deductions that are tied to AGI. Your 2015 tax return and your 2016 pay stubs and other income- and deduction- related materials are a good starting point for estimating your AGI. Another important number is your “tax bracket,” i.e., the rate at which your last dollar of income is taxed. The tax rates for 2016 have not changed from 2015 and are 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. Although tax brackets are indexed for inflation, if your income increases faster than the inflation adjustment, you may be pushed into a higher bracket. If so, your potential benefit from any tax-saving opportunity is increased (as is the cost of overlooking that opportunity).
Annual Gift Tax Exclusion: The most commonly used method for tax-free giving is the annual gift tax exclusion, which, for 2016, allows a person to give up to $14,000 to each donee without reducing the giver's estate and lifetime gift tax exclusion amount. A person is not limited as to the number of donees to whom he or she may make such gifts. Further, because the annual exclusion is applied on a per-donee basis, a person can leverage the exclusion by making gifts to multiple donees (family and non-family). Thus, if an individual makes $14,000 gifts to 10 donees, he or she may exclude $140,000 from gift tax. In addition, because spouses may combine their exclusions in a single gift from either spouse, married givers may double the amount of the exclusion to $28,000 per donee. A person may not carry over his or her annual gift tax exclusion amount to the next calendar year. Qualifying tuition payments and medical payments do not count against this limit.
IRA, Retirement Savings Rules
Tax-saving opportunities continue for retirement planning due to the availability of traditional and Roth IRAs and other retirement savings incentives.
Traditional IRAs: Individuals who are not active participants in an employer pension plan may make deductible contributions to an IRA. The annual deductible contribution limit for an IRA for 2016 is $5,500. For 2016, a $1,000 “catch-up” contribution is allowed for taxpayers age 50 or older by the close of the taxable year, making the total limit $6,500 for these individuals. Individuals who are active participants in an employer pension plan also may make deductible contributions to an IRA, but their contributions are limited in amount depending on their AGI. For 2016, the AGI phase-out range for deductibility of IRA contributions is between $61,000 and $71,000 of modified AGI for single persons (including heads of households), and between $98,000 and $118,000 of modified AGI for married filing jointly. Above these ranges, no deduction is allowed.
In addition, an individual will not be considered an “active participant” in an employer plan simply because the individual's spouse is an active participant for part of a plan year. Thus, you may be able to take the full deduction for an IRA contribution regardless of whether your spouse is covered by a plan at work, subject to a phase-out if your joint modified AGI is $184,000 to $194,000 ($0 - $10,000 if married filing separately) for 2016. Above this range, no deduction is allowed.
IRA Rollovers: As of 2016, taxpayers may make only one IRA-to-IRA rollover per year. (Direct rollovers from trustee to trustee are not affected.) An attempted rollover after the first will be treated as a withdrawal and taxed at regular rates, plus a possible 10% early withdrawal penalty.

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