Year End Tax Tips for Everyone

Happy Monday!  With 2013 coming to a close, almost, I thought I would focus on some end of  the year tax tips.

In general, there are some end of the year tax tips that can be done to manage your income taxes.  For example you may want to try to earn additional income in 2013 or perhaps you want to defer (push ahead) income to 2014, depending upon what tax bracket you are in.  These tactics can be used to optimize your tax liability between 2013 & 2014.

Here are some more tax tips for individuals:

• Accelerate or defer expenses.  Much like the income tip I mentioned above.  Making that major purchase in 2013 may benefit you more if you hold off til 2014.  Look at the benefits, tax credits and liability before you decide. 
• Are you thinking of getting married?  I would look at your tax liability as a married couple before you decide.. you may want to postpone til after the new year and then you have the rest of they year to plan or recover any benefits you may have lost.
• Contribute to your IRA, 401k, flexible spending account all of these types of contributions are tax exempt. IRA up to a certain amount - about $5500 this year I think.
• Own rental property?  Now may be the time to purchase that energy efficient appliance and get the tax credit, plus all the money you put into that rental property is a tax write off which helps to counter balance the income you received throughout the  year.
• Donate to a charity!  This is the best way to get a tax deduction.. this is like getting the best of both worlds.. save money by giving to others.  This is a win win situation and you feel great!  Just be careful there is certain criteria that must be met not all donations are tax deductible.  You can claim up to $50 each for bags of clothing that you might donate .. for example.  
• Speak to your CPA or attorney.  Just to be sure, I would consult your CPA or attorney to discuss which advice is best for you as an individual.

Here are some tips for Retirees:

• Do a dry run on your tax return:  Retiring can have a major impact on your finances.  It is very helpful to start planning now.  Do a practice return now using a free online tax software.   All the techniques I offered for individuals will benefit you if you are retiring or retired.
• Check and double check your withholding instructions on Social Security, pensions and any early withdrawals.  If it is not accurate or enough you may pay heavy penalties and interest.  It is really important to check with your estate planner or CPA to be sure.

Here are some money saving tips for small business owners:

• Spend some money - If you make any purchase before the end of the year, you may be able to deduct most of your purchases - for things like computers, furniture, software, vehicles, equipment and more.  Even if you don't think you have to, you may want to review.  Then check with your CPA to see if Section 179 deduction is still available.
• Hiring a returning or disabled veteran - The returning heroes tax credit provides businesses that hire unemployed veterans a tax credit up to $9,600 per veteran.  Read more:  Returning Heroes and Wounded Warrior Tax Credits.
• Defer your income - much like for individuals - you may want to review this ahead of time with your CPA or accountant.
• Set up a retirement account or fund one before the end of the year.  Check with your plan administrator for limits and deadlines for different types of plans.  Contact us if you need a referral.
• Contribute to charity.
• Keep your records straight.
• Speak to your CPA or attorney.  Just to be sure, I would consult your CPA or attorney to discuss which advice is best for you as a small business owner.
  

Sources for information above:  

http://www.sba.gov/community/blogs/community-blogs/small-business-cents/7-money-saving-year-end-tax-tips-small-business

http://taxes.about.com/od/taxplanning/qt/year_end_tips.htm

http://www.marketwatch.com/story/year-end-tax-tips-for-retirees-and-pre-retirees-2013-11-21