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1. |
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Maximize your
retirement plan contributions. Employees
should contribute to an employer's
tax-deferred retirement plan before December
31st, especially if the employer matches all
or part of the contribution. Contributions
to qualified retirement plans can help build
a more secure retirement and actually lower
income taxes by reducing your taxable income
in the current and future years. |
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2. |
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Delay selling investments and other capital
assets, with anticipated gains, until such
assets have been owned at least one year.
This one year holding period is required for
favorable long-term capital gains treatment.
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3. |
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Pay your January mortgage payment before
Christmas to ensure that the interest
portion of the payment is included in your
year-end mortgage interest total and
deductible on your current federal tax
return.
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4. |
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Pay your first real estate tax installment
(unless escrowed by a lender institution)
before Christmas. Real estate taxes are
deductible and this installment is due
February 1st in most communities.
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5. |
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If required to make quarterly estimated tax
payments, pay your fourth quarter state
estimated payment by December 31st. This
payment is due January 15th and is
deductible.
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Make donations (cash, check, used clothing
and other items) to charitable organizations
by December 31st and remember to get a
receipt. You can no longer prove donations
of $250 or more with a cancelled check
alone.
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7. |
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If you may be able to deduct medical
expenses (above 7.5% of AGI) or unreimbursed
employee expenses and other miscellaneous
deductions (above 2% of AGI), accelerate
current year expenses (professional dues,
subscriptions, medical expenses, insurance,
contract payments, etc.) by paying them by
the end of the year.
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8. |
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Defer income to the new year or accelerate
income to the current year to take advantage
of possible lower tax bracket if earnings
will be substantially lower this year. Time
awards, bonuses, sales of investment
property accordingly, depending on your tax
situation.
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9. |
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If you qualify for a deductible IRA
contribution, make the contribution before
April 15th. If you do not qualify for an IRA
deduction due to participation in an
employer sponsored retirement plan and would
like to put additional funds away for
retirement, consider a Roth IRA.
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10. |
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Homeowners with substantial credit card
balances, car loans, and other personal debt
should consider a home equity loan or paying
off personal debt as part of refinancing an
existing home mortgage. Keep in mind,
interest paid on credit cards, car loans,
etc. is considered personal loan interest
and is not deductible. Interest on home
mortgages and equity lines is deductible for
federal income tax purposes and these loans
traditionally have lower interest rates. |
