Year End Tax Tips Tax Moves to Lower your Tax Bill

Tax payers rely on the set of year end tax planning methods like the deferring income to the next year and increase deductions into the current year. A good example is whereby one holds off selling of investments with profits until later on. The individual may also pay tax deductions like the property tax or charity donations. There are many tips that an individual can use to lower their tax bill at the end of the year.

1. Bonuses paid in the new year instead of the current year, employees can ask their employer to pay their bonuses at the end of the previous year instead of paying them at the beginning of the new year. This method will help the taxpayer pay less in their tax bill.

2. The individual can also hold off selling any stocks and other investments that the individual owns which have taxable gains, these should be sold off in the new year.

3. Restraining from taking distributions from the IRA, or any other retirement plan, until the beginning of the new year which falls in the month of January.

4. Paying of all taxable deductions expenses in the previous year such as medical expenses, charity donations and property tax will lower ones tax bill.

5. The individual can also convert some of their pre- tax IRAs and 401K contributions to a Roth Account and then the person can report their income in the previous year.

6. Another way to lower ones tax bill is to take their IRA distributions in the previous year instead of the current year.

7. The individual can also hold of selling of investments that are making losses until the next year until they make capital gains when the tax rate will be higher and the losses will have more tax value attached to them.

8. Selling pf stocks that have lost value will also help the individual file for such losses in the previous year and hence lower the individuals tax bill.

9. Another way to lower the tax bill is when an individual increases their contributions towards the 401k or the IRA contributions.

There are many ways that an individual can lower their tax bill, they just need to be wise and calculative on how to achieve this goal of lowering their tax bill at the end of the year. All the individual needs to do is be fully aware on how to work with their tax information and see how they lower their tax bill successfully.