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Year End Tax Moves You Cannot Miss
Having extra money in any pocket is great overall for everyone paying taxes.
Amazon has some of the best resources for other ways to reduce the taxes you owe.
Amazon has JK Lassers guide to lowering income taxes next year
Never leave money on the table when you do not have to
Filing income taxes always comes with the New Year. Letting Uncle Sam know how much money you made in the last year and what you owe him is a necessity. They call it filing income taxes. Lots of people never realize at the last minute there is still time for tax deductions or a way to lower the taxes you are obligated to pay. Make these moves before midnight on December 31st and see some kind of break when it is time to file those returns.
Donate old clothes
Cleaning out the closets is generally associated with the springtime instead of the month of December. Take the time to do it now and donate old clothes you no longer wear is lucrative. Make sure you get a receipt for your efforts for a benefit.
This is terrific for anyone that itemizes deductions. Surprisingly countless people never realize how much their old stuff is actually worth. Clothes in good condition handed to a charitable organization are worth hundreds of dollars every year. Check out sites like Goodwill to determine how much things donated are really worth. They have guides to help with putting a value on every item. Most people are surprised at the value of what you award to charity.
Energy efficient homes
Congress extended the credit for energy efficient home deductions. Taxpayers receive credits up to 10% for qualified energy efficient enhancements made to a house. Improvements like insulating, new doors and windows, water heaters that are energy efficient and other renovations all qualify. Making a home transformation to alternative energy constructions like wind turbines or solar equipment, gets a credit up to 30% of the total cost.
Any conversion to wind or solar energy equipment qualifies for a tax break through 2016. There is a lifetime max of $500 for everyone making energy efficient upgrades. Windows are typically the most expensive and they have a lifetime max of $200.
An will be missed by scores of individuals this year. At the end of 2013 it is no longer available. The educator expense deduction includes public or private schools. Educators for grades K-12 deduct up to $250 for materials and supplies purchased for the classroom. Even spending above the $250 is still deductible on Schedule A. education deduction
This particular cut for itemized filers is located on the front page of every return. This gets rid of miscellaneous ones with a floor of 2% before expenses are filed on adjusted gross income. This is a great one to add in if possible before the deadline at the end of the year.
Buy a motor vehicle
Most people avoid car shopping during the holiday season. However, it happens to be beneficial for anyone living in a state where there is no state income tax or you wind up paying a small amount. Under itemized filing is an option of deducting state, local or sales tax paid during the year. This is where buying a motor vehicle comes in handy.
You automatically receive a credit for actual sales tax paid in a year or a percentage of the sales tax computed using your income and other exemptions. Along with the sales tax credit, get a credit for the sales tax on the purchase of certain motor vehicles as well. Both cars and trucks qualify along with boats and aircraft.
Buying a motor vehicle is only beneficial if it’s affordable or you were getting one in the near future anyway. You might as well get something out of it if you were picking one up anyhow.
Its not too late to get more money back in your pocket from the tax man
Lump itemized deductions
Did you know putting all of your itemized deductions together results in a better return? Planning out expenses whenever possible will help with getting more miscellaneous items on a return. The more items you have the better break you see. If you speed up some into this year or delay them until next year the more you lump together the better.
One area where countless people accelerate these is for medical expenses. Elective surgeries are one of the biggest and easiest to move. If you were getting a CAT scan or MRI in January, see if you can push it to December. These are great examples of lumping itemized medical deductions.
401 (k) breaks
Not all tax payers are able to take this one, but making a year-end contribution to a 401(k) is a wonderful way to see fewer taxes owed. Although everyone will not get the IRA contribution cut, give the upper limit to your 401 whenever possible. Countless individuals discovered increasing the percentage added between now and December 31st gets the most out of it.
Sole business owners searching for ways to stash some cash can get a solo 401(k) to work in their favor. The individual maximum amount is an investment possibility along with 20% of the profit from business ventures and 25% of business costs. A limit of $51,000 is available for sole business owners under the age of 50. Anyone over the age of 50 will max out at $56,500.
College tuition payments
Paying the tuition for college early is never fun. Though, the American Opportunity Credit will give those qualified persons a break every year. For the first four years of college a credit of $2500 is available.
Tuition will need to be at least $4000 to get the maximum of $2500. The $4000 of qualified education expenses are what the taxpayer paid during the calendar year and not the school year. Depending on semesters, breaks and other factors countless people will exceed the $4000 in one calendar year.
Tuition paid with loans does qualify. However, any money for college coming from grants or scholarships will not. If you are short, pay next year’s tuition in December. If you do not pay it all, pay as much as possible to get the maximum break of $2500.
Countless people leave these tax credits on the table and miss out on thousands of dollars. They never realize that even in December you still have options to make your taxes lower or increase your return. All of these are itemized deductions. This doesn’t mean the EZ filer is left out. Any taxpayer is able to file with itemize deductions when needed.
Hopefully, you find one or more useful and add a benefit to your 2013 tax year.
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