Friday, December 21, 2012

Last minute Tax Charm planning tips

The New Year is just around the corner.  I hope everyone is enjoying all the holiday festivities. Now, let's get to business, tax business! There is still time for tax planning for the 2012 year. In this post, I will talk about some final tips on cutting your tax bill or getting a bigger tax refund.

Tax planning this year is more difficult due to the indecision about which tax cuts will expire and which tax cuts will be extended. All the same, there are still actions we can take to trim down our tax burdens.

-Get organized. Gather all cash receipts, contributable donations receipts, paid tuition receipts, IRA earnings statements, student loan interest payment receipts, and all other tax related documentation together.
-Gather up old clothing, toys, furniture, books, and anything else you don’t need to donate to a charity. This also helps with getting the house clutter-free for the New Year. Make sure you get an itemized receipt of everything you donate to claim on your taxes if you itemize deductions.
- Maximize your contributions to IRAs and 401Ks.  The benefit is it defers your taxable income and your money grows tax free.  Also, depending on your income, you may be eligible for a tax credit for contributing to 401K or a qualified retirement plan.
- Pay college tuition and/or continuing education expenses early before January 1st.  The Lifetime Learning Credit is still around for 2012 and I just read the American Opportunity Learning credit will be extended.
- If you own your home, pay January mortgage in December. December interest is billed on January’s mortgage bill, and you can deduct 2012 mortgage interest  expenses on your 2012 tax return.
See you taxpayers next time at Tax Charm!


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