10 Easy End of Year Tax Tips to Increase Your Tax Refund

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The article below is up to date based on the latest tax laws. It is accurate for your 2017 taxes, which you will file by the April 2018 deadline. Learn more about tax reform here.

It’s hard to believe that we are in the last quarter of the year! With 2017 coming to an end, now is a great time to make some easy and smart tax moves to help lower your tax bill and increase your tax refund come tax time. Once the year ends, so do most of your opportunities to reduce your 2017 taxes.

Here are 10 quick and easy end of year tax tips you have time to take advantage of:

1. Get organized: Sooner rather than later! It’s never too early to gather receipts for tax deductible expenses and sources of income. Doing it now will help you ensure you’re not forgetting anything significant and help you see a better snapshot of your finances ahead of the new year.

2. Defer bonuses: If your hard work paid off this year and you are expecting a year-end bonus, this extra money in your pocket may bump you up to another tax bracket and increase your tax liability. If you can hold off on seeing any extra income this year, see if your boss will pay you your bonus in January. You will still receive it close to year-end, but you won’t have to pay taxes on it when you file your 2017 taxes. TurboTax TaxCaster can help you see where you stand with and without this income.

3. Accelerate deductions & defer income: There are a handful of tax deductions that are recognized the year in which you pay them. For example, if you own a home and get a mortgage interest deduction, and if you make an extra mortgage payment on December 31, you can claim that additional tax deduction on this year’s taxes. This lets you take the deduction immediately rather than wait an additional 12 months when you do your taxes for next year.

4. Donate to charity: The holiday season is coming, which is a great time to clean out your closet and household goods to give to those in need. You can help someone in need and reap benefits of a tax deduction for non-cash and monetary donations donated to a qualified charitable organization.

If you volunteer at a qualified charitable organization, don’t forget that you can deduct your mileage (14 cents of every mile) driven for charitable service. TurboTax ItsDeductible will accurately value and track your yearly-donated goods and mileage for volunteering. Make these donations count on your taxes by donating by December 31st. Even if you make a donation by credit card, you do not have to pay it off in 2017 to receive the tax deduction.

5. Take a class: Taking a course to advance your career and build your business is also a great way to boost your tax refund. Paying for next quarter’s tuition by December 31 may give you a valuable tax credit up to $2,000 with the Lifetime Learning Credit.

6. Maximize your retirement: Another great way to reduce your taxable income while building your nest egg is to make a contribution to your retirement savings account. Whether you contribute to a 401(k) or a Traditional IRA, you can take a dollar for dollar reduction in your income and also save for the future. Additionally, if you are self-employed and contribute to SEP IRAs, you can deduct up to 25% of compensation or $54,000 for 2017.

7. Spend your FSA: If you have a Flexible Spending Account and have money left, get caught up on your doctor’s visits. The old “use it or lose it” rule may not still apply, but if you have unused money in your FSA account on December 31, you may only be able to carry over up to $500 into your 2017 FSA or your plan may limit the amount of time to 2 1/2 months after the end of the plan year to use your funds.

8. Buy low, sell low: Chances are you have a few investments in your portfolio that have gone down in value, but did you know you can recognize your losses and use them to offset investment winners? To do this, you need to sell the losing investments and offset your losses against your gains recognized. If your losses exceed your gains, you can apply $3,000 of that against your regular income. Any extra will then be passed to the next tax year.

9. Estimate your household income for Marketplace Insurance: Are you applying for a subsidy or discounted insurance in the Health Insurance Marketplace this open enrollment season, which is from November 1st to December 15th for 2018 Marketplace insurance? If so, you will have to project your 2018 household income and family size when you apply. Start looking into any changes that may take place in 2018 (growing your family, job promotion, heading into retirement, etc.) These changes may affect the amount of subsidy you are given to help you pay for health insurance.

10. Increase your Marketplace Premium Tax Credit: If you received assistance for Marketplace insurance in the form of an Advanced Premium Tax Credit, one smart move you can make is to lower your adjustable gross income by contributing to your retirement plan, which may increase the premium tax credit you’re eligible for when you file your 2017 taxes.

Don’t worry about knowing these tax laws. TurboTax will ask you simple questions about you and give you the tax deductions and credits you are eligible for based on your answers.

Comments (15) Leave your comment

  1. What version do I need to purchase this year that includes investments. Last year I had to take back the premium version for the deluxe

    1. Hi Richard,
      We do have info about social security and retirement, but we will take this into account.
      Thank you,
      Lisa Greene-Lewis

  2. I did my 2015 taxes through turbo tax. I did not complete my state tax part. What should I do since its going to be another year.

  3. I need to file a 1041 return for my deceased wife’s trust return as well as my 1040. What TT package will handle the interface?

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