Time to Make End of the Year Tax Moves
Catch These Tax Advantages Before Year’s End
As fall approaches, the time comes to make use of advantages offered by the tax code. With the new year just around the corner, the current tax year is about to come to an end. Make sure to get the best tax situation this spring by utilizing these tax tips.
Collect and Organize Substantial Receipts
With only a couple months until the new tax year, you only have that much time to make and write off relevant business expenses. Business expenses that can be written off are more common than you think.
Expenses on wining and dining potential clients, as well as some capital expenses, can serve as a deduction come April.
Also, if you shell out a few bucks for school-related expenses to stay competitive in your industry, keeping track of the education-related receipts will pay off come April. In a competitive industry, knowledge is power. Getting that knowledge can also lower your tax bill as well.
Increase Your Retirement Donations
It may have to compete with all that holiday shopping, but putting a little bit of extra money into your individual retirement account is a smart tax move at the end of the year. It’s possible to deduct from your tax bill the entire amount you contributed to your IRA during the year.
Also, if you’re self-employed, the year’s contributions to a self-employed IRA can also be written off from your taxable income. Working for yourself can be a satisfying – and a financially savvy – experience.
Make Use of Energy-Saving Appliances
Another competitor with holiday shopping, buying energy saving appliances can also serve as a write off come April. Their savings are twofold: once for your April tax return, and monthly savings from decreased energy costs.
Everything from smaller items like certain water heaters, insulation, air conditioning units, to larger items like residential wind turbines can qualify for a tax credit.
Save a Little More for a Possible Bigger Tax Bill
Before the tax year ends, certain lumps of income can be gained that will heftily increase your tax bill. For instance, if a part of your income is earned in cash form, taxes on that won’t be taken out automatically or with the ease of a computer accounting program. That’s why you’ll have to set a bit aside to pay that extra tax bump after the new year.
You should also practice this dose of financial restraint if you’ve gotten married and earn significantly more than your spouse. With the marriage penalty, both working spouses are treated as one, likely putting a husband and wife into a higher tax bracket coupled with a higher tax bill.
End of the year tax implications are just another thing to think about along with the family dinners and gift ideas. While the leaves are changing color and fall has come, that leaves limited time to make the most out of the tax code to leave you with a smaller tax bill.
What tax moves do you make as the year comes to a close? Comment below or tweet us @StopIRSDebt!