10 year-end tax moves to make now to lighten your tax load

Couple-Calculating-BillsBunch your deductible expenses.

In several instances, deductions must be more than a certain threshold amount. Start consolidating eligible expenses now. This strategy will push them into one tax year where you can make maximum tax use of them.

Add to, or open an IRA.

If you have an IRA account or open a traditional IRA, you might be able to deduct at last come of your contributions on your tax return. It’s true you can wait until the April filing deadline to contribute for the previous tax year, the sooner you put money into an IRA, traditional or Roth, the sooner it can start earning more for your golden years.

Be generous to charities.

As you’re putting together your holiday shopping list, be sure to include charitable gifts that could help reduce your tax bill. You can donate the traditional household goods and clothing, as well as vehicles, stock or mutual funds, and more.

Pay college costs early.

The spring semester’s bill isn’t due until January, but it might be worthwhile to pay it before year’s end. You may be able to claim a tax credit, but because the rules and phase-outs for various education tax breaks are different, you need to get acquainted with them to see which one works best for you.

Check health insurance.

Taxpayers who can afford health insurance but who don’t have adequate coverage must pay a fine, which can run into several hundred dollars or more, depending on the size of your family. This fine is payable when you file your return. Check into coverage now. Employer or individual plans purchased through a state marketplace generally qualifies as adequate coverage.

Defer your income.

Be sure to watch your tax brackets. If you are just about to cross into the next higher one, think about ways to defer receipt of money where you can.

Add to your 401(k).

Since most plan contributions are made before taxes are taken out, you’ll have a bit less income that the IRS can touch. Plus, the sooner you put money into the account, the longer the earning with grow tax-deferred.

Review your FSA amounts.

Flexible Spending Accounts allow you to contribute up to $2,550 to an FSA via paycheck withdrawals. As with 401(k) plans, money goes into an FSA before taxes are calculated. However, check with your employer just in case you must use your FSA money by December 31.

Harvest tax losses.

If you have assets in your portfolio that have lost value, they could be a valuable tax tool. Capital losses can be used to offset any capital gains. Consult your financial advisor or tax professional.

Make the most of your home.

Home ownership provides a variety of tax breaks. One of the biggest is mortgage interest, which can be deducted if you itemize. Check with your tax professional on other deductions.

Members 1st logo

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: