THE TAX ATTIC with Jerry Coon

Early tax-saving tips

Jerry Coon

As many of you know, last Tuesday the Environmental Protection Agency (EPA) held a meeting at Rockford Public School’s ninth-grade facility to discuss their involvement in the potential cleanup of Wolverine World Wide’s Tannery property. This is a wonderful and valuable piece of property along the Rogue River directly north of downtown and along the White Pine Trail. There is a question, however, as to whether the property will require an environmental cleanup or how much cleanup will be required before it can become a factor in the future success of downtown Rockford. The answer to that question was not answered last Tuesday night.

I work in the income tax system. That system of laws can be very confusing and the numbers within that system can tend to make the system even more confusing. Basically, I make a living by being able to interpret and apply those laws and numbers. However, I have to admit that Tuesday’s presentation via the liberal usage of charts, test result numbers, and the accompanying explanations, at certain points, was able to confuse me. The presenters were masters at not tipping their hands, so to speak.

Glen Blackwood of Great Lakes Fly Fishing Co. tried his level best in an attempt to get the EPA presenters to give an answer on a 1-10 scale of where the property stood. Even Glen, who is also a very good auctioneer, couldn’t get any type of commitment. They did pass on a ton of information, however, and listened to many people provide their opinions. The opinions varied from supporting Wolverine as a good corporate citizen, to not trusting Wolverine because it is a big corporation citizen, to just trying to get the presenters to clarify the volume of information they were presenting. I happen to support Wolverine as a good corporate citizen and feel they will do what is proper to allow Wolverine and the public to use the property.

My opinion is to let Wolverine and the Michigan Department of Environmental Quality put together an appropriate plan of action with the EPA having oversight approval. It appears, however, the bottom line is this: the EPA has until June 21 to make a decision as to how they will deal with this property. From what they said last Tuesday, they are reserving the right to take right up until June 21 to make that decision. The fact that they are taking until the last minute tells all of us how important that decision is. It’s a big decision and let’s all hope they get it right.

There are also a number of important tax decisions that can be made early in the year that greatly affect the amount of tax that taxpayers will ultimately pay when filing their tax returns next year.

For example, taxpayers with a 401(k) or a 403(b) under the age of 50 are allowed to contribute up to $17,000 to their retirement. Taxpayers age 50 or older are allowed to contribute up to $22,500. Now we know there are at least two benefits to reaching age 50: taxpayers are allowed to join AARP and also put an additional $5,500 into retirement savings. It’s easier to defer those amounts over the course of the entire year. It’s important to contribute as much as possible if you expect your tax bill to be as small as possible next tax season.

Another tax-saving tactic is taxpayers who qualify to contribute and deduct contributions to traditional individual retirement accounts may contribute up to $5,000 to their account. Also, an additional $1,000 may be contributed upon reaching age 50. That is another advantage of reaching age 50.

A third tax-saving tactic is taxpayers with health savings accounts may contribute up to $3,100 for those with a single plan and $6,250 for those with a family plan. There is an advantage of getting older here, too. Taxpayers age 55 or older may contribute up to $4,100 in a single plan and $7,250 in a family plan. These deductions are subtractions from income above the line, as the tax saying goes. If distributions are taken to pay for medical expenses, the amount withdrawn is not taxable. I do have to say that even though I have a large and growing number of clients with HSAs, not that many contribute the maximum to their accounts.

A further advantage of making a contribution to an HSA is that, upon reaching age 65, the money can be withdrawn for other items that are not necessarily medical in nature. If withdrawn for non-medical reasons prior to age 65, the amount withdrawn is taxable and there is a 20% penalty. At age 65, the amount is taxable but there is no penalty.

Think about making tax-saving moves early in this year. It will save taxes later on. This is Jerry Coon signing off.


Jerry Coon is an Enrolled Agent. He owns Action Tax Service on Northland Drive in Rockford. Contact Jerry at

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