Tax Planning Start Tax Planning Early: 8 Great Year-End Tax Tips Read the Article Open Share Drawer Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Pinterest (Opens in new window)Click to print (Opens in new window) Written by Ginita Wall Published Nov 8, 2013 3 min read When you think of the holiday season, what comes to mind? Gift exchanges? Holiday parties? Home-baked pies? Taxes? I know you have a lot of other things to do this time of year, but the holiday season is a great time to make some last-minute tax moves before the year is over. Here are eight of my favorites: 1. Ask for a New Year’s Bonus Instead of a Christmas Bonus By delaying your bonus by only a week, you can push the payment of taxes on the income 15 months into the future — a year from next April. 2. Clean Out Your Closets and Donate to Charity You can clean out the old clothes, sporting goods, books, and other household goods that you no longer use and welcome the New Year with new space in your life, and get a quick tax deduction to boot. Document these donations by making a list of the items at the time you donate them. You can use TurboTax It’s Deductible to accurately value your donated goods. 3. Pay Donations by Credit Card Payments made by credit card are deductible in the year they are charged, not the year they are paid, so you can donate to your favorite charity by December 31 and not pay the bill until next year. 4. Contribute the Maximum to Your 401(k) or 403(b) Retirement Plans Some employers will allow you to catch up on contributions by increasing your deduction on your last paychecks of the year. If you are 50 or over, don’t forget that you can contribute an additional $5,500 “catch-up” contribution in addition to the regular 401(k) or 403(b) $17,500 limit for 2013. 5. Check the Balance in Your Flexible Spending Account A wonderful fringe benefit, these helpful plans allow you to set aside a portion of your salary before taxes for certain purposes, such as child care or health care expenses. These plans did work on the “use it or lose it” concept: any amount unused at the end of the year was lost, however the Treasury and IRS modified the rule and now employees may be allowed to carry over $500 of unused amounts for next year’s expenses. Your employer may also offer the existing plan option to use unused amounts for up to two and half months following year end. 6. Bunch your Medical Bills Medical expenses are only deductible when they exceed 10% of your adjusted gross income (still 7.5% if you are over 65). If your income is low this year or your medical expenses are high, speed up your deductions accordingly. If you want to take the deductions this year, pay any outstanding medical bills before year-end, stock up on prescriptions, get new glasses, and pay your health insurance premiums before the end of the year. 7. Estimate Your Taxes You can use TurboTax TaxCaster to estimate your taxes and see if you need to make any last minute tax moves. The IRS treats income taxes withheld from your paycheck as if they were paid in equal amounts throughout the year. So if your calculations show you’ll owe money, you can increase the withholding on your last paychecks of the year to make up the difference. You can also try the new TurboTax MyTaxGuru to see what you can do to get a bigger tax refund when you file your taxes. 8. Don’t Forget to Gather Your Receipts You can deduct union dues, legal and professional fees relating to tax and investment advice, and unreimbursed employee business expenses of mileage, equipment, education, and supplies, among other things. If you pay a lot of expenses for your job or your investments, gather up the receipts and cancelled checks so you can save more money when you file your 2013 taxes. Previous Post Options for Taxpayers Who Can’t Pay Their Tax Liability Next Post Four Tax Tips for Armed Forces Personnel Written by Ginita Wall More from Ginita Wall 214 responses to “Start Tax Planning Early: 8 Great Year-End Tax Tips” « Older Comments I had teeth extracted and implant set in November. Since I’ve reached the threshold for medical/dental itemized deductions I would like to include the rest of the process including dentures as a writeoff on this years taxes. Even though I won’t be receiving the denture until March of next year if I pre-pay by Dec 31 can I write it off this year? Reply I would like to respond to Sunna’s question and comment about Flexible Spending. I have never experienced what you did with Flexible Spending. Something does not sound quite right, but you have until March of the following year to spend the money and then October of that year to actually file your claim for the money. e.i. 2013 claims can be filed until October 2014. You have until March 2014 to spend the money and the same for previous years, 2012 you have until 2013. I always fax my paperwork over. Only once did I have an issue they didn’t receive one of the papers and after some time past I called and then re-submitted. They can’t keep your money if you filed in a timely manner. I would try to re-submit with a letter stating when you first submitted the original one and those there after. I am sure you will get your money. Flexible Spending is a win win I wouldn’t stop using it because of this incident. It lowers your taxable income and you’ve got money set aside during the year to pay those out of pocket medical expenses. Good Luck! Reply Our daughter is a single mom. We pay for her home, car, insurances, HOA, the grandson’s pre-school, clothing, groceries, etc. We let her claim him as her dependent. Can we claim anything on either of them? Thanks so much, D Reply Dee, You are very generous. If your daughter’s home is in your name, you can deduct the interest and property taxes you pay. If it is in your daughter’s name, neither of you can claim the deduction – she can’t because she didn’t pay it, and you can’t because you didn’t own it. You would only be entitled to the medical insurance deduction or child care expenses if you claim them as dependents. HOA, car, clothing, groceries, etc are personal expenses, not deductible expenses for any taxpayer. Mary Ellen Reply I just got married in April 2013. I am a teacher and pay my student loans based on my AGI. I heard that there is a penalty for filing married but separate is that true??? And if so what is amount of the penalty? By filing jointly will it affect by AGI for paying my student loans? Reply Frank, You will need to weigh the increased income tax against the possible increased loan payment. You can prepare your tax return in TurboTax as two married filing separate returns and as a joint return to see what the tax expense is. If your loan repayment plan is impacted by your AGI, and your spouse does not have student loans, you could see an increase in your payment. You would need to discuss this with your lender. Mary Ellen Reply In 2013 we had to foreclose on a piece of property that we were the private lender on since 2007. We have claimed interest earned over the years. My question is: we have had to put a lot of expense into getting the property and house into saleable shape. When we sell the property this year can we deduct all the expenses we had to pay and also write off the mileage incurred for this property? Reply I forgot to ask on my previous question about the property taxes we had to pay in 2013. Will we be able to deduct those in 2013 since we received the property back thru a Sheriffs Deed? Our owner ship started on May 18 for the Manufactured Home and final deed for the land on Dec 18 (Idaho requires a 6 month right of redemption for land, the house was not considered real property at the time of foreclosure, we have since turned it into real property with the land) Reply Jill, IRS publication 537 address repossessed property originally sold on an installment sale. You will need to report the gain or loss on the repossession. Based on that calculation, you will have a new basis in the property and the costs you incur to fix up the property for sale will be added to that basis and affect your gain or loss on the new sale. In general, you can deduct only taxes imposed on you. Since you did not own the property at the time of the payment, you cannot deduct the taxes as an itemized deduction for 2013. The property taxes you paid on the property can be added to the basis as a cost of the repossession. Mary Ellen Reply My son whom is 19 pays child support for his daughter. Can he claim this on his taxes? The child is living with the mom who is stil in high school and lives with her parents. She is on social services. Can her mom claim the child? Reply SU, Child support is not a deductible expense. Mary Ellen Reply Thank you. Can he claim earned income credit with or without saughter? There are many things to consider when determining if someone can claim the EITC. I do not have enough information available to me to make that determination. However, the IRS does have an interactive guide to help you determine who qualifies. You can find it at http://www.irs.gov/Individuals/EITC-Home-Page–It%E2%80%99s-easier-than-ever-to-find-out-if-you-qualify-for-EITC Mary Ellen Reply I believe I missed deducting my post-tax health insurance premiums paid a few years ago. Since that was paid post-tax, can I deduct that along with doctor co-pays? If so, what info do I need for documentation? Also, how many years back can taxes be amended? Thank you! Reply RDP, Post-tax health insurance premiums are deductible as well as doctor co-pays. You should keep a copy of your insurance statement and the bills from the doctor for documentation. You can amend your personal tax returns for 3 years based on the later of the date filed or the original date due. If you filed your 2010 return by 4/15/2011, you must amend it before 4/15/2014 to claim a refund. Mary Ellen Reply I paid my daughter’s college tuition in January of 2013. She graduated from college in May of 2013 at the age of 22. She lived with me in all of 2013 while working a part time job. In November 2013, she got a full time job but remained at home. Can I claim her as a dependant on my 2013 taxes? Also can I claim the tuition expense as I have in previous years if she is no longer considered a dependant? Thank you. Reply Robert, If you can claim your daughter as a dependent, based on age, income, student status, etc, you can claim the tuition expense deduction or credit. If not, your daughter can claim it on her tax return. Mary Ellen Reply « Older Comments Leave a ReplyCancel reply Browse Related Articles Tax Planning Holiday Bonus Taxes Tax Planning End of Year Tax Tips [Infographic] Tax Planning How Bonuses Are Taxed: A Complete Guide Tax Planning 10 End of Year Tax Tips Income and Investments Bonus Round: 5 Tips for Your Work Bonus Self-Employed How Holiday Bonuses are Taxed for Contract Workers Tax Tips The Tax Implications of Receiving a Holiday Bonus Tax Planning Save With These 7 End-of-Year Tax Tips Tax Deductions and Credits Holiday Donations and Tax Savings Tax Planning 6 Ways to Get Organized Now to Make Tax Time Easier
I had teeth extracted and implant set in November. Since I’ve reached the threshold for medical/dental itemized deductions I would like to include the rest of the process including dentures as a writeoff on this years taxes. Even though I won’t be receiving the denture until March of next year if I pre-pay by Dec 31 can I write it off this year? Reply
I would like to respond to Sunna’s question and comment about Flexible Spending. I have never experienced what you did with Flexible Spending. Something does not sound quite right, but you have until March of the following year to spend the money and then October of that year to actually file your claim for the money. e.i. 2013 claims can be filed until October 2014. You have until March 2014 to spend the money and the same for previous years, 2012 you have until 2013. I always fax my paperwork over. Only once did I have an issue they didn’t receive one of the papers and after some time past I called and then re-submitted. They can’t keep your money if you filed in a timely manner. I would try to re-submit with a letter stating when you first submitted the original one and those there after. I am sure you will get your money. Flexible Spending is a win win I wouldn’t stop using it because of this incident. It lowers your taxable income and you’ve got money set aside during the year to pay those out of pocket medical expenses. Good Luck! Reply
Our daughter is a single mom. We pay for her home, car, insurances, HOA, the grandson’s pre-school, clothing, groceries, etc. We let her claim him as her dependent. Can we claim anything on either of them? Thanks so much, D Reply
Dee, You are very generous. If your daughter’s home is in your name, you can deduct the interest and property taxes you pay. If it is in your daughter’s name, neither of you can claim the deduction – she can’t because she didn’t pay it, and you can’t because you didn’t own it. You would only be entitled to the medical insurance deduction or child care expenses if you claim them as dependents. HOA, car, clothing, groceries, etc are personal expenses, not deductible expenses for any taxpayer. Mary Ellen Reply
I just got married in April 2013. I am a teacher and pay my student loans based on my AGI. I heard that there is a penalty for filing married but separate is that true??? And if so what is amount of the penalty? By filing jointly will it affect by AGI for paying my student loans? Reply
Frank, You will need to weigh the increased income tax against the possible increased loan payment. You can prepare your tax return in TurboTax as two married filing separate returns and as a joint return to see what the tax expense is. If your loan repayment plan is impacted by your AGI, and your spouse does not have student loans, you could see an increase in your payment. You would need to discuss this with your lender. Mary Ellen Reply
In 2013 we had to foreclose on a piece of property that we were the private lender on since 2007. We have claimed interest earned over the years. My question is: we have had to put a lot of expense into getting the property and house into saleable shape. When we sell the property this year can we deduct all the expenses we had to pay and also write off the mileage incurred for this property? Reply
I forgot to ask on my previous question about the property taxes we had to pay in 2013. Will we be able to deduct those in 2013 since we received the property back thru a Sheriffs Deed? Our owner ship started on May 18 for the Manufactured Home and final deed for the land on Dec 18 (Idaho requires a 6 month right of redemption for land, the house was not considered real property at the time of foreclosure, we have since turned it into real property with the land) Reply
Jill, IRS publication 537 address repossessed property originally sold on an installment sale. You will need to report the gain or loss on the repossession. Based on that calculation, you will have a new basis in the property and the costs you incur to fix up the property for sale will be added to that basis and affect your gain or loss on the new sale. In general, you can deduct only taxes imposed on you. Since you did not own the property at the time of the payment, you cannot deduct the taxes as an itemized deduction for 2013. The property taxes you paid on the property can be added to the basis as a cost of the repossession. Mary Ellen Reply
My son whom is 19 pays child support for his daughter. Can he claim this on his taxes? The child is living with the mom who is stil in high school and lives with her parents. She is on social services. Can her mom claim the child? Reply
There are many things to consider when determining if someone can claim the EITC. I do not have enough information available to me to make that determination. However, the IRS does have an interactive guide to help you determine who qualifies. You can find it at http://www.irs.gov/Individuals/EITC-Home-Page–It%E2%80%99s-easier-than-ever-to-find-out-if-you-qualify-for-EITC Mary Ellen Reply
I believe I missed deducting my post-tax health insurance premiums paid a few years ago. Since that was paid post-tax, can I deduct that along with doctor co-pays? If so, what info do I need for documentation? Also, how many years back can taxes be amended? Thank you! Reply
RDP, Post-tax health insurance premiums are deductible as well as doctor co-pays. You should keep a copy of your insurance statement and the bills from the doctor for documentation. You can amend your personal tax returns for 3 years based on the later of the date filed or the original date due. If you filed your 2010 return by 4/15/2011, you must amend it before 4/15/2014 to claim a refund. Mary Ellen Reply
I paid my daughter’s college tuition in January of 2013. She graduated from college in May of 2013 at the age of 22. She lived with me in all of 2013 while working a part time job. In November 2013, she got a full time job but remained at home. Can I claim her as a dependant on my 2013 taxes? Also can I claim the tuition expense as I have in previous years if she is no longer considered a dependant? Thank you. Reply
Robert, If you can claim your daughter as a dependent, based on age, income, student status, etc, you can claim the tuition expense deduction or credit. If not, your daughter can claim it on her tax return. Mary Ellen Reply