Want to lower your 2013 tax bill? The time for action is running out, so consider these tax-savers now.
* You can choose to deduct sales taxes instead of local and state income taxes. If you’re planning big ticket purchases (like a car or a boat), buy before year-end to beef up your deductible amount of sales tax.
* If you’re a teacher, don’t overlook the deduction for up to $250 for classroom supplies you purchase in 2013.
* Consider prepaying college tuition you’ll owe for the first semester of 2014. This year you can deduct up to $4,000 for higher education expenses. Income limits apply.
* Max out your retirement plan contributions. You can set aside $5,500 in an IRA ($6,500 if you’re 50 or older), $12,000 in a SIMPLE ($14,500 if you’re 50 or older), or $17,500 in a 401(k) plan ($23,000 if you’re 50 or older).
* Establish a pension plan for your small business. You may qualify for a tax credit of up to $500 in each of the plan’s first three years.
* Need equipment for your business? Buy and place it in service by year-end to qualify for up to $500,000 of first-year expensing or 50% bonus depreciation.
* Review your investments and make your year-end sell decisions, whether to rebalance your portfolio at the lowest tax cost or to offset gains and losses.
* If you’re charity-minded, consider giving appreciated stock that you’ve owned for over a year. You can generally deduct the fair market value and pay no capital gains tax on the appreciation.
* Another charitable possibility for those over 70½: Make a direct donation of up to $100,000 from your IRA to a charity. The donation counts as part of your required minimum distribution but isn’t included in your taxable income.
* Install energy-saving improvements (such as insulation, doors, and windows) in your home, and you might qualify for a tax credit of up to $500.
These possibilities for cutting your taxes are just the starting point. Contact us now for a review of your 2013 tax situation and tax-saving suggestions that will work best in your individual circumstances.
Written by: Doug Rodrigues