As 2014 comes to an end and many of us begin preparing for a holiday season full of family, friends, food, and fun. In the spirit of the great football rivalry that’s come down to the wire in the 4th quarter, it’s time to give it everything we have and leave everything on the field.
With only about 6 weeks left in 2013, I’m sharing my top tips to help you save money and maximize your deductions when you file this year’s return. This will mean either spending some money or donating unwanted items before December 31. There are a few ways to accomplish this:
1 Make charitable donations now! Have multiple boxes of used clothing, an unused vehicle, or even household items taking up space in your garage? Donate it to a local charity (typically a 501C-3 Organization) and be sure to get a receipt for the value of the items. If you itemize on your personal tax return, you can claim this as a tax deduction. (Even if you don’t itemize on your Federal Return, some states allow you to include the deduction on your State Return, so don’t forego this opportunity to help others and yourself at the same time!) You can also make donations of cash to your favorite charity or religious organization and claim a deduction if you itemize on your Federal Return.
2 Pay bills that qualify as deductions but may not be due until 2014 before December 31, 2013. Example: Your 2013 real estate taxes aren’t due until Jan 15, 2014. You receive the bill or otherwise know the amount now. Pay the invoice before the due date and the amount paid is deductible on your Federal Return Schedule A (Itemized Deductions). The same holds true for medical/dental bills with a Jan 2014 due date. Pay them sooner rather than later.
3 Use your Flex Spending Dollars instead of losing them! Many Flex Spending Plans require that you use the money in your account by Dec 31 or lose it. Have medical procedures completed before the end of the year and avoid losing the money that you’ve contributed to the plan. (As of this writing, the rules have been loosened somewhat. Contact your tax advisor for those specific to your situation.)
4 Start or contribute to a non-Roth IRA. For 2013, the maximum amount you can contribute to your IRA is $5,500 unless you’re age 50 or over. If you are 50+, the amount increases to $6,500. For some taxpayers who are not covered by an employer plan, this amount is fully tax deductible unless you make more than $178,000 a year after which, the deductibility rules change. Roth IRA contributions are not deductible.
Remember, every situation is unique and these tips are general in nature and only meant to spark a conversation between you and your tax advisor.
In my next post, I’ll share tips and strategies for business filers.
And now for the legal jargon:
IRS CIRCULAR 230 DISCLOSURE: Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication (including any attachments) is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any tax-related matter.
Kemberli Stephenson is The Profit Sherpa & works with rapid growth women entrepreneurs, speakers, coaches, authors, small business owners, entertainers, etc. She helps those who are looking to impact their bottom line, increase profit margins and grow a successful business. Kemberli helps entrepreneurs rapidly increase profits by helping individuals and companies chart a course to the summit, discover their danger zones and blind spots, and develop and implement profit strategies that will grow as your organization grows. Follow @Profit_Sherpa on Instagram for daily tips and motivation for entrepreneurs.