Year-End Strategies that Can Help You Save on Taxes

‘Tis the season to want to think about fun and family, presents and good food. Thinking about year-end strategies for your upcoming tax return is probably not on your list. But, whether you were naughty or nice over the past year, a little bit of year-end planning could save you a lot of green in the Spring. OK, we’re not trying to add to the stress of the holidays. Everybody knows that there’s plenty of that to go around. But, there are a few year-end strategies that you really should consider in your spare time, if you have any of it available during these last few weeks of the year.

Now, we all know that the best write-off is to give birth prior to midnight on New Year’s Eve but, of course, not everybody is in a position to do that. Here are a few other year-end strategies that can also be very lucrative next year when you file your taxes:

Getting Organized

You’ve probably heard this before ad nauseum but it is the most significant step in your year-end tax prep. If you’ve found yourself being really lazy about keeping track of your expenses and just tossing receipts in your desk drawer, kitchen junk drawer, or even just a shoebox, getting organized is a top priority. This way, when it’s time to go see your account or tax preparer, you can be proud that you’re not showing up with that old shoebox and asking him or her to spend valuable time (and your money) going through all of them to get a total for each expense category. So, this step helps save time and money plus it helps you save face with your accountant.

Getting Reconciled

OK, in theory, you should be reconciling your bank statements every month but we all know that sometimes that may not happen. So, reconcile them all now and you can close out the year both organized and reconciled.

Getting Serious About Retirement

Another method for lowering your taxable income for 2017 is contributing to a retirement plan, such as:

  1. 401(k)
  2. 403(b)
  3. SIMPLE IRA
  4. Deductible IRA
  5. SEP

You only have until the end of 2017 for making 401(k) and 403(b) contributions or 2017 but until April 16 for making contributions to an IRA, as well as certain other plans.

Buy Now!

You also want to purchase certain items before the end of the year so that you can write them off and those items include but are not limited to the following:

  1. Hearing aids
  2. New prescription glasses and contact lenses
  3. Medications you’ll be needing in 2018
  4. Large purchases where you pay sales tax

Be Charitable

Donating household goods and clothing to charities before the end of the year is good because it’s tax deductible. Be sure that you acquire a receipt from the receiving organization and be sure to bear in mind that this deduction will be limited to the current fair market value (FMV) of the donated items i.e. approximately what they might sell for at a garage sale. Cash donations, of course, are much easier to figure. Just make sure to keep receipts or canceled checks for all of them.

Child Care

This is a very useful and often forgotten deduction. If you work and pay for childcare, you can deduct the amount you paid for the year. Just be sure to be armed with the caregiver’s pertinent info, including their social security or tax ID #. This isn’t something that you want to put off until tax time in case it takes some time and effort to acquire this info. With professional organizations like daycare centers, it’s usually pretty straightforward and they may even issue statements at tax time. With friends, neighbors, or relatives, it may not be quite so easy. And, if you didn’t advise your mother-in-law, for example, that you would be reporting the deduction which then becomes income for her tax return, you might have to do some negotiating.

Dependents

Now, this is one that you probably won’t want to get into over Christmas dinner but it is something that you should try to get straight before the end of the year. Many couples when they split up and have dependents end up fighting over who gets to claim them. Technically, the child should live with the parent who is claiming them for at least six months of the year. That doesn’t stop parents and even other relatives from claiming the dependent. Right or wrong, often a non-custodial parent claims the dependents. And, always remember, he who files first gets the tax break. It may get overturned later in the year by submitting proof like school info, etc. but it can be a real mess and take many months. So, it’s always better to get those things straight before tax time and also to file early.


Add Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Kevin Mayer
20 Things You Didn’t Know About Kevin Mayer
10 Reasons to Add Peer to Peer Lending To Your Portfolio
Maryellis Bunn
20 Things You Didn’t Know About Maryellis Bunn
David Einhorn
20 Things You Didn’t Know About David Einhorn
Apple Card
10 Drawbacks About Owning The Apple Card
Do You Really Need to Save That Much for an Emergency Fund?
10 Recession Proof Dividend Stocks You can Lean On
York Water Stock
20 Reasons You Might Consider York Water Stock
20 Ways Technology is Watching You Without You Knowing
Blockchain
Five Companies Leading the Way in Blockchain Technology
airplane technologies
20 Technologies That Will Rule the World in 2020
Chatbots
The Growing Use of Chatbots in Customer Service
The 20 Best Hotels in Sedona, Arizona
The 20 Best Things to Do in San Antonio for First Timers
Oceanside Municipal Pier in San Diego
The 20 Best Seafood Restaurants in San Diego
10 Reasons Puerto Vallarta Beach Club is the Ultimate Romantic Getaway
Best Cadillac SRX Models
The 10 Best Cadillac SRX Models of All-Time
2016 Mercedes-Benz GLC Class
The 10 Best Mercedes GLC Models of All-Time
Best Cadillac Escalade Models
The 10 Best Cadillac Escalade Models of All-Time
Best Ford Ranger Models
The 10 Best Ford Ranger Models of All-Time
The 20 Best Gym Watches for 2020
Diesel Men's Master Chief Quartz Model DZ1206
The 20 Best Diesel Watches of All-Time
The 20 Best Skagen Watches of All-Time
Oris Martini Racing Limited Edition
The 20 Best Oris Watches of All Time