If you have some spare cash available at the end of the year, consider investing in tax savings.
Regardless of the current season, everyone knows that tax-time is never too far off in the future. As inconvenient and time consuming as filing and paying taxes may be, the IRS-imposed penalties for failure to do so are even less pleasant. Fortunately, there are some methods that may be able to potentially save you money on your next tax bill. The following tips are suggestions not intended to serve as substitutes for advice from your experienced tax planner and financial advisor.
Pay Your Real Estate Taxes Early.
In addition to making you appear responsible and credit-worthy, paying your real estate taxes early is one way to help lower your tax bill. If you are responsible for paying your own real estate tax, making payments due at the beginning of the New Year on or before December 31st of the current year will allow you to get the tax deductions from these payments a year earlier in most cases.
Make Your Mortgage Payment Early.
By Jan 1st of the New Year to be exact. Doing this means that your lender will get your payment at the start of the New Year, but won’t report it for the previous (or current as the case may be) year, which means that you will be able to add the amount to your yearly deduction sooner.
Contribute to Your Retirement Plan.
This is a smart financial move to make in any situation, but making extra contributions to your 401k or IRA, taking advantage of additional catch up contributions for those 50 and older, can pay off in extra tax deductions.
Make Big Gifts Now.
You can reduce, postpone, and in some cases avoid paying your estate tax by making gifts of up to but not to exceed the current annual limit by the end of the fiscal year. The 2017 annual gift exclusion limit is $14,000.1
Calculate Your Medical Expenses.
You may not realize that some of your medical-related expenses may be eligible for tax deductions. Specifically, medical expenses that exceed a set percentage of your AGI (Adjusted Gross Income) are eligible for deduction. For 2017, Americans under 65 will need their medical expense deductions to add up to 10% of their adjusted gross income (AGI).2
There are many more ways to potentially reduce your tax bill, such as making use of Earned income or Child Tax credits (EITC of CTC) with limits established for the current tax year. Your personal certified financial planner and tax advisor can help you examine your budget and tax records to better determine how you can use these benefits, credits, and exemptions to your advantage this tax season.
Citations.
1 - smith-howard.com/resources/articles/irs-increases-2017-estate-and-gift-tax-limits
2 - my.castlighthealth.com/blog/medical-expense-deductions/