Year-End Tax Strategies to Maximize Savings

Tax Strategies Onlinehyme

As the year draws to a close, it’s time to consider tax-saving strategies that can optimize your deductions and help defer end-of-the-year income. Certified Public Accountant Sue Miller, based in McLean, Virginia, offers valuable insights into smart tax-saving tips:

  1. Clean Out and Donate
  2. Review Charitable Contributions
  3. Donate Appreciated Stock
  4. Consider Taking Stock Losses
  5. Prepay State Taxes
  6. Medical Expenses Deduction
  7. Early Mortgage Payment
  8. Delay Invoicing
  9. Consider Retirement Contributions
  10. Consult Your Accountant

1. Clean Out and Donate:

  • Organize your belongings, including clothes and toys, and donate items to local charities.
  • Decluttering not only benefits others but also allows you to claim deductions for charitable contributions.

2. Review Charitable Contributions:

  • Assess your charitable contributions and, if below your desired level, consider making additional donations.
  • Contributions made before the year-end are still tax-deductible.

3. Donate Appreciated Stock:

  • Contribute appreciated stock to your preferred charity, enabling you to deduct the fair market value.
  • This strategy allows you to minimize out-of-pocket costs, as the deduction is based on the stock’s original purchase price.

4. Consider Taking Stock Losses:

  • Offset capital gains by selling stocks that have incurred losses during the year.
  • This can help manage your overall tax liability.

5. Prepay State Taxes:

  • If you anticipate owing state taxes, make the payment by December 31, instead of waiting for the January 15 deadline for the fourth-quarter estimated payment.

6. Medical Expenses Deduction:

  • To qualify for a medical expenses deduction, ensure that your out-of-pocket medical expenses exceed 7.5 percent of your adjusted gross income.
  • Schedule additional medical appointments or necessary purchases to meet this threshold.

7. Early Mortgage Payment:

  • Consider making your January mortgage payment in December to claim an additional interest deduction on your tax return.

8. Delay Invoicing:

  • For cash-basis, self-employed taxpayers, delay sending December invoices to customers to defer income into the following tax year.

9. Consider Retirement Contributions:

  • If self-employed, explore setting up a pension plan for your business. Keogh plans must be established by December 31.
  • If the deadline is missed, a SEP (Simplified Employee Pension) plan can be set up by the tax return due date.

10. Consult Your Accountant:

  • Stay informed about the latest deductions by consulting your accountant.
  • Understanding the current tax landscape ensures you don’t miss out on potential opportunities to save money.

By strategically implementing these year-end tax strategies, you can not only optimize your deductions but also position yourself for a more tax-efficient financial future. Don’t hesitate to seek advice from your accountant to stay abreast of the latest developments in tax regulations.

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