Top Tips for Year-End Taxes

Calculating taxes can be really confusing especially if you are still new to the whole system. With the end of the tax year around the corner, you’re probably looking for ways to save some bucks before April. Here are some tax tips that will help you out:

Donate to charity

If tax deductions are what you seek to benefit from, you can reduce your tax liability with some charitable donations. An end-of-year donation to a charity listed by the government for rebates will save you money. Once the donation has been made, you can claim the tax deduction.

Sell off loss-bearing investments

If any of your investments have failed and lost money, sell them off. This helps to offset the gains from selling profitable investments. Even if you haven’t experienced any gains this year, deductions of up to $3000 can go in capital losses.

Adjust for withholding tax on Form W-4

If you are confident that you will be receiving a tax refund or if it looks like you’re going to owe money, update the exemptions on the IRS Form W-4. This is filed with your employer, telling the company the amount to withhold from your paycheck for income tax purposes.

tax recordsTo avoid owing money, increase your withholding tax from each paycheck. If you’re anticipating a large refund, reduce the tax withheld.

Open an IRA

If you haven’t yet thought about a retirement plan, we suggest you do. It’s of great benefit when it comes to year-end taxes. Contribute to the IRA and get a deduction on your taxes. If you already have an IRA of your own, contribute to the Roth IRA. The benefit of this plan is that you pay no taxes when withdrawing the sum on retirement.

Invest in a tax-excludable gift

The IRS allows an individual to gift up to $14000 which is exempt of the gift tax. If you do plan on investing in such a gift, do so before the end of the calendar year. This will allow you to reap the benefits of it for that year’s tax collection.

Bunch expenses

Tax deductions are allowed when the total exceeds a pre-determined portion of your Adjusted Gross Income. This occurs with medical expenses and miscellaneous deduction on Schedule A.

According to the IRS, individuals can only deduct medical and dental bills if they are more than 10% of the Adjusted Gross Income. To take advantage of the rule, bunch together your medical bills for the year.

If you have already exceeded the threshold for medical expenses, find out if the medical expenses can be accelerated to the current year. If you can’t meet the threshold of the year, you’re better off postponing those expenses to the New Year.

One Place Financial offers personalized solutions are great service to our clients. If you are looking for a tax consultant in Bellflower, CA, visit us. We also provide sales tax filing services. Contact us at (562) 867-5200.