At this time of year, many taxpayers consider final options to help reduce taxes due. Regardless of who you ask, the top ideas seem to fall under the following 4 categories:
- Make contributions to your retirement accounts now!
- Take a look at your investments and re-balance as needed. You can utilize up to $3,000 of capital losses above gains to lower your taxable income each year.
- Give! Whether to charity or dependents, monetary or non-monetary – now is the perfect time to make donations. Remember to itemize non-monetary gifts to charity as well!
- Look for expenses that you can pay now and deduct from this year’s tax bill. Some of these include property tax bills, medical expenses, and estimated state income tax bills
Some additional ideas, applicable depending on your employment situation, include deferring your year end bonus to January if it is approved by your employer. Self employed tax payers having a bit more flexibility with billing can wait until the end of December to bill customers, lowering total income for the year.