How was everyone’s turkey day? Gobble Gobble. I can’t believe how fast time flies. Is 2014 really almost over? Unbelievable. I am still writing 2013 when dating things! Reflecting on it, it was perhaps the most pivotal year for me yet. Probably L&A’s most pivotal year as well. Mirror, mirror on the wall.. who’s the fairest of them all? Ok I am done reflecting now. At least we still have the most magical time of year to look forward to. Christmas! Santa, I would like a Teenage Mutant Ninja Turtles Stretch ’N’ Shout Leonardo and a Mutant Mania Mutant Masher. And a Transformers Stomp & Chomp Grimlock. Ok I think I am done. So now I should get to the point right? Here are 5 tax tips for end of year to boost your refund!
1. Get into the holiday spirit a give to charity. I know you work hard for your money.. so hard Because you work hard for it you want to hold on to as much of it as you can. But donating to a worthy cause is a great way to be an everyday superhero while at the same time reducing your tax balance or boosting your tax refund. Your donations don’t have to be only cash either. That christmas sweater that doesn’t fit because you lost 30 lbs since last Christmas. That couch that doesn’t fit stylistically with the new living room set you want to buy. That car out in the driveway that you keep meaning to spend a day and figure out why it died but continually never get around to doing it. So many items can be donated. One mans trash is another mans treasure. You could really help someone out. You could have a dramatic effect on your tax liability as well.
2. Plan for retirement and make contributions. So planning for retirement is quite important as many people run out of money before its their time to go to Heaven. Or H-E-double hockey sticks depending on what kind of person you are. Just kidding. I don’t think any of our readers are going downstairs. As it turns out, you can pay into your Traditional IRA up to a $5,500 limit and $17,500 towards a 401(k)s. The limit goes up for those of us over 50. So contact human resources or whoever is in charge of your retirement and tell them you want to max it out. Some contribution limits will increase for next year as well so discuss this with them as well.
3. Defer income. You don’t want that Christmas bonus now. You want it on January 1. It’s often a smart strategy to defer income if you can. Especially if this bonus elevates your tax practice to the next level. Maybe your in the 15% bracket at a $65,000 salary. Your boss tells you you did a good job this year. You’re getting a $10,000 bonus. Oops, but now your in the 25% tax bracket. If you want some help with this, do not hesitate to contact us below.
4. Accelerate Deductions. You may have certain tax deductible expenses that you can pay for now. Do it. Otherwise you’ll be waiting another 12 months to take advantage of them. Make an additional mortgage payment on December 31st. The mortgage interest will serve as a tax deduction. The doctor can squeeze you in for that rotator cuff surgery tomorrow? Out-of-pocket medical expenses can be another deduction. Take care of tax deductible expenses now. Do not wait until after January 1.
5. Sell off those bad investments. Maybe you bought some stock at $79 and it now sits at $35. Maybe you have a whole boatload of real losers in your portfolio. These losers can be used to offset the investments that have done well. Or if you have more losers than winners, you can use up to $3,000 in losses toward your income. So in the words of Jim Kramer, “SELL!SELL!SELL!”
Santa Clause is coming to town and no the toys you have to buy as gifts are not a tax deduction. Well if you’re buying them for a charity then yes. But otherwise no. So these are our 5 tax tips for end of year to boost your tax refund. If you have any questions or would like to set up an appointment to talk about this tax stuff then contact us just below! Merry Christmas and Happy Holidays from all of us at L&A! Thanks for reading. Until Next Time.