While tax time isn’t until April 15th 2012 but there are several actions you can take over the next several days that will either reduce what you pay Uncle Sam or increase your tax return come April. Here are some end of the year tax savings tips to do before you ring in the new year.
End Of The Year Bonus
Are you expecting an end of the year bonus? Well you’ll have to pay taxes on that bonus. If you don’t want your taxes to be too high this year, ask your employer defer the payment until the first of January. Sure, you’ll still have to pay taxes on that income, but not until April 2013. So put the money in an interest-bearing account and collect the interest for well over a year, rather than just a few months.
Mortgage Interest
If you have a mortgage you already know you can deduct the interest you paid to the lender during the year. And if you’re like most people you pay your mortgage some time between the 1st and the 15th of each month. Well instead of paying January 4th, for example, make a payment December 31st. If you do, the interest you paid on that payment will be added to your 2011 1098 form that your lender sends you every year. Thus, you’ll have 13 payments in the year instead of 12. Doing this will decrease your tax liability if you itemize.
Donations
If you’re feeling a bit generous this time of year consider making a donation to your favorite charity. Any amount you give is considered a tax deduction. You won’t technically save money on this one, but it will decrease your tax bill come April 2012. Another good related tip is to make your donation in the form of an appreciated stock you have. You won’t pay taxes on the appreciation, yet you will be able to deduct the full amount as a charitable contribution on your tax return.
Tax Credits
Some tax credits are expiring in 2011. Others will be phased out in coming years. Tax credits for making energy efficient home improvements will be phased out this year, for example. So if you had, are having, or are thinking of making those types of improvements, pay for them before the year is over to take advantage of the government subsidy.
Part of the Ethernity
