The end of the year is almost here.
It’s time to reflect on what all you’ve accomplished and
start thinking about what you want to happen in 2014.
If you wait until the New Year to start dealing with your
income tax situation, you are probably missing out on a few opportunities to
save.
So let’s take a look at seven money saving year end tax tips.
1. Estimate Taxes Now
– It’s important to take some time to estimate your federal income taxes before
the year ends. Doing so will allow time for you to make the necessary
adjustments to affect the amount of your total tax burden.
2. Start a Tax Prep
Checklist – This is a great time to break out a tax preparation checklist and
start checking items off as they come in. Break out last year’s tax return as a
reference to help build out a more accurate checklist.
3. Organize Those Tax
Records – If you keep physical copies of your tax returns this is a good time
to locate last year’s file for reference and create a brand new one for your
2013 taxes. Temporarily place this file next to where you collect your mail,
and drop items (W2s, 1099s, etc.) in as they arrive to your home. Additionally,
this might be a good time to invest in a scanner and go digital with your
records.
4. Invest Into a
Retirement Account - One of the best things you can do for your tax situation
at this time of year is invest more money into your 401K. December 31st is the
deadline to make contributions for this year. If you’re thinking of investing
with an IRA, you’ll have a little longer: April 15th or the date you file. Both
are great decisions that help prepare you for retirement and reduce your tax
burden.
Arkansas Business Tax Extension
Arkansas Business Tax Extension
5. Contribute to (and
Spend Dollars in) a Flexible Spending Account – If you don’t have a flexible
spending account, consider opening one through your employer to take advantage
of the tax-deductible medical spending (up to $2,500). If you already have a
flexible spending account, be sure to use up the funds in the account by the
end of the year or whenever your employer’s grace period ends.
6. Make Those
Charitable Contributions – It’s the giving season. Take advantage of this great
tax deduction and contribute cash, clothes, and more to the less fortunate this
holiday season. Note that 2013 is the last year people age 70 and a half can
make a qualified charitable donation (up to $100,000) from an IRA.
7. Think About
Deferring or Accelerating Income and Expense – After estimating your taxes and
considering probable changes to your income and expenses in the coming year,
you might want to defer or accelerate your income or expenses. As an example,
if you know you’ll be earning more next year, you might want to put off paying
your annual property taxes until January.
Doing so will give you more expenses in the next year to
offset the higher income. If the opposite is true and you expect your income to
fall in 2014, you might want to take advantage of every deduction you can –
like paying those annual taxes in December, or prepaying your January mortgage
payment to get an extra mortgage interest deduction.
No comments:
Post a Comment