There are certain things one can do to save on taxes.
Tips to Lower Your Taxes: Flexible Spending Account
If you participate in your company’s Flexible Spending Account (FSA) and you still have money left, don’t let it go to waste. You can spend the money left-over to buy over-the-counter medications, buy new eye glasses or contact lenses, see your doctor or dentist and pay for the items with your FSA that are otherwise not covered by your dental and health insurance. There are companies that extend the offer to spend flex funds, oftentimes through mid March or 2 months from December, check if you company is one of them.
Tips to Lower Your Taxes: Charity
Donate clothes, household goods, toys, and money to any of your favorite charities. You can include whatever the market value of what you donated in your tax deductions. Just make sure to get a receipt, letter from the charity, or bank records to show any cash or donations worth over $250.
Tips to Lower Your Taxes: Retirement Plan
Contribute the maximum allowed contribution for your retirement plan. The IRS allows you to contribute up to $15,500 in a 401(k) plan if you are under 50 years old (up to $20,500 if you are over 50). This is good since this is money that is yours when you retire at the same time it is free of tax.
Tips to Lower Your Taxes: Tax Deductions
Pre-pay your mortgage bill for January by December 31st. Also, if you live in a state that has a property tax, pay them off before the year ends. You can only deduct the amount paid in in the same year you are filing taxes for.
Tips to Lower Your Taxes: Postpone Income
Check with your employer about the possibility of postponing your income if it is getting closer to the year-end. If you defer your income for the current year into the following year, the income will not apply fr that same year you are filing taxes for. Remember that you can’t defer any income issued on the current year even if you did not deposit or cash the check. If you are a freelance or if you go by invoices, you may want to send the invoice to your employers after the year ends so that they can issue you their payment in the new year.
Tips to Lower Your Taxes Offset Capital Gains
Use your deductible losses on any of your investments to offset any gains. You are allowed to use $3,000 of net capital losses in excess of capital gains to offset ordinary income.
Tips to Lower Your Taxes: Defer Capital Gains
If you own stocks and if you expect to belong to the 10% or 15% tax brackets next year, you may want hold off selling your shares until the following year. This way, you won’t have to pay any tax on the profits from the sale of assets which you’ve owned longer than one year.
Tips to Lower Your Taxes: Alternative Minimum Tax
Review your Alternative Minimum Tax (AMT) situation now to see if you’ll be one of nearly 23 million taxpayers potentially affected by it. Find out more about how this could affect your tax return or delay your refund. Per IRS: “The tax laws give preferential treatment to certain kinds of income and allow special deductions and credits for certain kinds of expenses. The alternative minimum tax (AMT) attempts to ensure that anyone who benefits from these tax advantages pays at least a minimum amount of tax.” For more info visit: http://www.irs.gov/taxtopics/tc556.html
Ten Year-End Tax Tips to Lower Your Taxes: Prepare Paperwork Early
You want to be able to prepare your taxes on time and be able to send them by the due date. Especially if you owe money, you will pay penalty if you do not file and pay your taxes on time. If you prepare early, you will save money on penalty fees.
Hopefully these tips can help you save money on your tax returns.
The author is neither an accountant nor a tax professional. Please consult a tax professional or an accountant if you need more information.