Year-end tax moves to make now

Income taxI’ve been writing for Credit.com for a while now, and they have a content partnership with some of the major online news outlets- which means my articles get some nice mileage.  My article on 8 year end tax moves to make (excerpt below) ended up on NBCnews, Fox Business, and Philly.com.  I’m not gonna lie; recognizing your story on the home page of MSN is pretty exciting.

I hope you’ll find some helpful info in the article.

But don’t dilly dally- when the clock strikes midnight on Dec. 31, it will be too late to make these tax moves that just might save you some money.

Clean Out Your closet

Got stuff? Spending your holiday vacation cleaning may not be fun but it can be profitable. Donating those old clothes (if you are itemizing deductions) can give you a last-minute boost. Be sure the items are in at least good condition, make a list and get a receipt. It will be up to you to value your items; both the Salvation Army and Goodwill have guides on their websites.

Button up Your Home

Earlier this year Congress extended the credit for qualified energy-efficient improvements to your home, but only through the end of 2013. You may be qualified to receive a credit of 10% of the cost of certain upgrades, like insulation, energy efficient water heaters, doors and windows; there is a lifetime maximum of $500 ($200 for windows). There is also a larger credit of 30% avaiEnergy Star Certified 2009lable through 2016 for alternative energy improvements such as qualified solar equipment and wind turbines, with no limit.

Lump Together Your Itemized Deductions

When it comes to miscellaneous itemized deductions, it can be hard to meaningfully exceed that pesky 2% floor, as well as the now 10% floor for medical expenses (still 7.5% if you’re over 65). By planning out your expenses to lump them together, you can get more bang for your buck. For instance, you can accelerate some expenses into this year, or delay into next, and do the same at the end of next year so that larger amounts fall within one year.

Beef up or Start a 401(k)

While IRA contributions can be made as late as April 15, contributions to 401(k) plans must be made by year-end to count for 2014. Not all taxpayers qualify to deduct IRA contributions, and adding to your 401(k) up to the maximum may be your only chance to get a tax deductible retirement contribution. If you can make up the cash flow shortage with other funds, bumping up your contribution percentage between now and year-end can help you get to your max.

 For those self-employed business owners (ideally with no other employees) looking to stash some cash, consider establishing a solo-401(k) plan now; you can not only sock away the individual maximum, but can also add a contribution of up to 25% of your compensation or 20% of business profit, up to a total maximum of $52,000 for 2014 for those under age 50, and $57,500 for those 50 and older. That adds up to be considerably more than a contribution to a SEP-IRA.

Saving for College Pay College Tuition Early

The American Opportunity Credit gives qualified taxpayers up to $2,500 each year for the first four years of a college education. To get the full $2,500 you need $4,000 of qualified educational expenses (paid during the calendar year, not the school year). For many schools, it’s no problem coming up with that and much, much more, but if your child goes to school at a community college or perhaps just one semester at a state school, you might be short. You can count tuition paid by loans, but not by scholarships or grants, so if your child received those, that can leave you short as well. You don’t want to leave money on the table if you can help it! Consider paying next semester’s tuition in December, or at least enough of it to get the maximum; tuition paid in the current year for semesters beginning in the first three months of the following year is eligible for the current year credit.

Tax Extenders after the November Elections?

The Credit.com article referenced also included deductions that expired in 2013- the educator expense deduction, the sales tax deduction, and the direct IRA to charity donation- however Congress has a way of resurrecting popular deductions, so keep a look out for a tax extender bill to keep them going.  A bill was introduced way back in the spring, but no action is expected until after the November elections.

Read the original article here.

This was pretty cool to come across

Stumbling on my name in Jean Chatzky’s book was neat too.

 

photos by: Alan Cleaver & ,
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