Only a fraction of people prepare as much as they should for tax season. I was burned last year by not saving enough money to pay in April. Jackson Hewitt has decided to give us a few tips so that we are all better prepared.
- Save more for retirement – By increasing retirement plan contributions, you can reduce your income for tax purposes. Taxpayers can contribute up to $16,500 to a 401(k), 403(b) or Federal Government Thrift Savings Plan; those over age 50 can contribute an additional $5,500.
- Prepay January payments in December – Taking care of your January mortgage payment, 4th quarter state tax estimate, or winter semester tuition now lets you claim these payments on your 2011 tax return.
- Get to the doctor – If you are holding off on a major medical procedure until after the holidays, stop procrastinating and make an appointment now to increase your 2011 medical expense deductions.
- Give to charity – Giving cash and non-cash donations to charity can give back on your taxes. And volunteering time counts too, which means volunteers throughout the country may be able to deduct their out-of-pocket expenses on a tax return.
- Save energy, save $500 on your taxes – If you are planning to buy an energy saving hot water heater or install energy efficient windows or insulation to your home, do it now. Up to $500 in credit may be available for making energy-related home improvements.