With only a few weeks left in 2013, now is the time to start getting ready for tax time. Planning is key, and with the new tax code in place for 2013, and virtually everyone’s taxes going up, you will definitely need to plan to maximize deductions and minimize this impact. Sandy Furuya, Senior Accounting Manager at Wamhoff Financial Planning and Accounting, highlights the following areas:
1. Charitable Donations.
- Prepare a list of the charitable organizations to which you’d like to donate, and budget appropriately.
- Issue either a check, or pay by credit card, by 12/31/13 to ensure the deduction.
- Individual contributions over $250 must have an acknowledgement letter from the charity, the date and amount of the contribution, and should state that no goods or services were received in return for the contribution.
- Bag up your non-cash items such as clothing, shoes and household items and take them to your favorite charity prior to year end. Be sure to get the receipt!
2. Increase Retirement Account Contributions
- Most people under 50 years of age can contribute $17,500 (or $5500 more over age 50) annually.
- If you haven’t reached that max yet, consider increasing your contribution.
- This will not only lower your taxable income, it increases your retirement security at the same time.
3. Spend Down Flexible Spending Accounts
- If you are enrolled in a flexible spending program through your employer, check your balance and spend the amount down by the end of the year, if possible.
- Schedule your dental appointment, eye doctor appointment, pay for your prescriptions, etc. to spend this account down.
4. Sell off losing stocks
- If you have stocks in your portfolio that are worth less than what you paid for them, now may be a good time to sell and take a capital loss on your tax return.
- You may take a capital loss of up to $3000 annually
- Consult your financial advisor and tax professional to see if this makes sense for you.
5. Go Green
- Upgrade to energy efficient water heaters, furnaces, air conditioners, and other appliances and building improvements.
- Tax incentives are available and there is still time this year to do these projects.