Wednesday, October 18th, 2017

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Year-End Tax Planning

With just a few weeks left until the end of the year, making the right tax moves now could potentially save you hundreds of dollars.  Here are 10 year-end tax planning ideas to review with your accountant.  Don’t wait until the tax filing deadline of April 15, 2010 to start thinking about your taxes, meet with your accountant in December so you still have time to make any last minute changes.

1. Consider gifting personal property
Consider making year-end charitable contributions of personal property such as automobiles, clothing and furniture.  Be sure to obtain receipts for your contributions which may be required to verify your donation.

2. Maximize flexible spending
Take maximum advantage of your flexible spending account: Check your balance.  If cash is left in your account consider such items as having your teeth cleaned, buying new glasses, or having Lasik eye surgery.  If cash is left in a child-care account, consider giving your care giver a year-end bonus.  Be creative.  For a detailed listing of qualified medical expenses visit http://www.irs.gov/pub/irs-pdf/p502.pdf.

3. Consider deferring income
If your taxable income is nearing a higher bracket, consider deferring income to the extent permissible  until next year.

4. Consider deferring income
If your taxable income is nearing a higher bracket, consider deferring income to the extent permissible  until next year.

5. Time income and expenses
Accelerate your income and defer deductions to next year to take advantage of your lower tax bracket this year.  Use this strategy if you expect your income to increase in the upcoming years.

6. Confirm tax withholding
Review with your accountant to determine if enough money has been withheld from your paycheck to meet your tax liability for 2009.  Consider increasing the amount withheld from pay late in the year.

7. Review casualty losses
Did you incur any property damage or loss for which you did not receive an insurance reimbursement?  If so, you may be eligible for a deduction on your taxes.

8. Consider delaying minor medical procedures
If your income is too high to permit a medical deduction this year, then consider delaying minor medical procedures until next year when you may be able to deduct them.

9. Deduct medical premiums
Self-employed individuals can deduct up to 100% of their medical premiums.  However, this special deduction cannot be claimed by self-employed individuals who are eligible to participate in a health plan that is subsidized by either their employer or their spouse’s employer.  Nor can the deduction exceed earned income derived from self-employment.

10. Take advantage of the low-income savers tax credit
You may be eligible for a tax credit if you earned a low income this year and made contributions to a qualified retirement plan or an IRA.  You may be able to take a credit of up to $1,000 if you’re single, or $2,000 if you’re married filing jointly.  This credit can reduce the federal income tax you pay dollar for dollar.

Matthew Brandeburg, CFP® has six years of financial planning experience and runs his own business, Bridgeway Financial Group, LLC, based in Columbus, OH.

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3 Responses to Year-End Tax Planning

  1. Au Pair says:

    Your comment about giving you child care giver a bonus if you have money left in your child care account is a great idea. I have never thought of doing that before. I am sure it could help in a number of ways.

  2. Pingback: 13 Tax Deductions You Can't Ignore

  3. Steven J Fromm says:

    Your readers may also be interested in what are called charitable remainder trusts. These trusts are used to place monies in trust for the benefit of the donor and the tax-exempt organization. Basically, the donor (and his wife if desired) can be paid an income from the trust for their lives or for a term of years. When this time frame ends the charity named as the residual beneficiary gets the balance in the trust. The advantage for the donor is that they reserve income to themselves and get a tax deduction in the year the trust is funded for the actuarial value of the residue going to charity. There are various types of charitable remainder trusts and the provisions can be fine tuned to meet various needs.
    Finally there is something called a charitable lead trust, that works in the opposite way; the charity is paid first and for a number of years and then the balance goes to family or other non-charitable remainder beneficiaries.

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