7 Unbeatable Tax Tips for the Year’s End
As 2013 wraps up, many of us have our minds on friends and family with the holiday season in full swing. However, a season that may deserve a little of your attention between Thanksgiving turkey and New Year’s Eve champagne is tax season, which is lurking around the corner in April. It’s never too early to prepare, and the year-end marker can be an important time to get your tax-related affairs in order. The blog Tax Break from TurboTax has come out with a series of posts for improving next year’s April woes. Check out these seven pointers for 2013 to make next year’s tax returns a little bit easier to handle.
1. Be mindful of holiday bonuses
It’s always a great feeling to have that bonus check in hand, but sometimes it may not be the optimal scenario for your tax accountant. Boosting your income by a slight margin could shift you to a higher tax bracket for the year, offsetting your bonus and then some. Consider if it’s better to realize your bonus in 2013 or 2014 and inform your employer accordingly.
2. Consider charitable donations
The holiday season is a great time to spread good cheer, and you may be thankful when April rolls around, as well. Giving to charities can carry tax deductions, helping you save on your IRS payment. If you need to get in a gift during the year of 2013, you can count the donation via credit card as long as you sign up for the payment by December 31. Just be careful of fraudulent charities, which the IRS has been warning people about for years.
3. Prepare for tax season
If you have a few extra minutes away from work and the family, maybe you can unwind over some tax documents. While it isn’t most peoples’ idea of a good time, creating a tax checklist and gathering together all relevant documents for the year before next year’s become scattered everywhere can be a serious time saver come April.
4. Keep track of deadlines
Deadlines can creep up at any time and in any shape or form. Some deadlines for income considerations can be at the year’s end, so there’s certainly plenty coming up in the near future. While the official filing deadline is April 15, the work doesn’t start then — and shouldn’t start the day before that — so plan out your time to meet the different deadlines of various parts of the tax code.
5. Don’t forget retirement savings
A great way to save money on taxes is by having a properly structured retirement plan. Both 401K and Roth IRA plans carry tax implications of various shapes and sizes, and planning ahead for retirement isn’t the worst thing to do, either. By balancing contributions, the savings can really add up once tax bracketing is considered.
6. Consider the child care credit
The IRS published an entire post about the child care credit earlier this year, in which the agency explained exactly how to use the credit and under what circumstances it is appropriate to file for it. Since it runs year-round, there’s no better time to jump on board than now, and you just might save a dollar or two.
7. Lump medical bills
There are thresholds for which medical bills become deductible if they total a certain percentage of your gross income (10 percent for most people is standard; however, it varies depending on circumstances). If you can lump your medical bills into this year or the next, you may become eligible for the effective tax deduction. This could involve loading up on prescriptions, getting new eyewear, scheduling an extra checkup or doctor’s visit, and prepaying plans.
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