5 really last-minute moves to cut 2016 taxes

• Time is running out on tax-shaving moves for 2016. In most cases, Dec. 31 is the deadline
• The general rule of taking deductions this year while delaying income is especially timely now
• It's also smart to update names and records for tax purposes if you haven't done so yet

Income-tax planning shouldn't be done in a hurry. But the clock is ticking for several moves that could shave your 2016 tax bill. Here are some key ones for individuals that will require almost instant action:

Lock in last-minute deductions

If you itemize deductions, now's the time to make various expenditures that could help reduce your taxable income on 2016 returns. Perhaps the easiest is to make donations to non-profit groups. You can lock in the deduction for 2016 by using a credit card, even if you don't pay the bill until next year. As for checks, they need to be mailed before the end of the year. Among other last-minute deductions, homeowners might be able to prepay property taxes that have been billed but aren't due until early next year.

Note: Arizona offers several state income-tax credits, including one for deductions made to charitable organizations. You can make these donations as late as next April 15 and still qualify for the state credit in 2016. But if you want to deduct the same charitable donation for federal tax purposes in 2016, you need to make the payment by year-end.

Harvest capital losses

If you're an investor with some unrealized losses, you can sell one or more money-losing securities, such as stocks or mutual funds, to lock in the loss for 2016. Why do so? Because if your losses exceed your gains, you might be able to deduct up to $3,000 of the excess against ordinary income this year.

Note: Normally you can sell money-losing investments through Dec. 31 and lock in a deductible loss. But as the financial markets are closed for the weekend, Dec. 30 marks the deadline this year.

Arizona tax credits down despite expansions

Make required retirement withdrawals

If you're older than 70½ and have money in traditional IRAs, you might need to make a required distribution by year end to avoid a nasty tax penalty. The normal deadline for making required minimum distributions, or RMDs, is year end. But if you just recently turned 70½, the initial withdrawal can be deferred until April 1 of the year following the year you turned 70½.. (For example, you could delay that first withdrawal until April 2018 if you turned 70 this month and thus will reach 70½ in 2017. Subsequent withdrawals must be made annually by Dec. 31. The penalty for not complying is stiff  — 50 percent of the amount that should have been withdrawn but wasn't. This requirement applies to money in 401(k) plans and most other retirement accounts but not to Roth IRAs.

Note: Despite the danger of triggering that 50 percent penalty, most investors in their 70s and older tend to procrastinate until late in the year, according to research by Fidelity Investments.

Defer income for a couple more days

Most people don't have the option of delaying their final paycheck of the year. But if you have leeway over when to bill clients or have other discretion of when to collect payments, it could pay to do nothing until next week. That way, income might be taxable not for 2016 but for 2017. In the same spirit, you typically don't want to sell stocks, mutual funds or other securities over the waning days of the year if you're sitting on gains and the investments are held in taxable accounts. 

Note: Income-deferring strategies make more sense if you think President-elect Trump and the Republicans in Congress will succeed in cutting tax rates in 2017, as they have pledged. Under the same assumption, deductions could be less valuable if taken in 2017 than in 2016.

Notify the IRS and Social Security

OK, this isn't a tax-shaving tip. But if you have read this far, it shows you want to keep on top of your tax-reporting obligations. People who moved during the past year should inform the U.S. Postal Service, their employer and the Internal Revenue Service of the new address. To notify the IRS, complete and mail IRS Form 8822. If your name changed recently due to marriage or divorce, notify the Social Security Administration so that both the IRS and SSA will have updated and matching records.

Note: A mismatch between a name shown on your income-tax return and Social Security records can cause problems in the processing of your tax return and delay your refund, the IRS warns.

 Reach the reporter at russ.wiles@arizonarepublic.com or 602-444-8616.