Recently I wrote about year-end tax planning moves to make now that can save on the tax bill you'll owe next April. I also wrote about 8 tax breaks that expire in 2013 and outlined a few moves to make before the tax provisions expire.
The point of tax planning is to get in a position where you pay less combined taxes for this year and the next. Before you do, there are several questions to ask. Can you claim itemized deductions? Will you be in a higher tax bracket this year, or next year? Should deductions and credits be claimed in 2013 or claimed in 2014?
Now that we have just a couple of weeks left in 2013, I want to highlight some tax-saving strategies that you can still take advantage of:
Pay taxes before the year ends
If you itemize deductions, then consider paying your real estate taxes due in the next several months before the end of the year. Also make sure you've fully paid your state income tax too. These taxes are eligible to be claimed on Schedule A as itemized deductions.
Donate to charity
Make any planned donations to charity now. With the stock market near a record high, now is a good time to think about donating shares to charity, instead of donating cash. The reason is that you'll deduct the market value of the donated shares and neither you nor the charity will have to pay tax on the gains.
Top off your 401(k) and retirement plans
Some employers will allow you to catch up on contributions by increasing your deduction from your last paychecks of the year. If you are 50 or over, don't forget that you can contribute an additional $5,500 “catch-up” contribution in addition to the regular 401(k) or 403(b) limit of $17,500 for 2013.
Note: The three coming up expire this year:
Take advantage of the section 179 expense deduction (for businesses)
If you expect to buy more than $25,000 of business use property in 2014, then make those purchases now. This deduction is a whopper for small and mid-size business owners. In 2013, business owners can immediately deduct up to $500,000 of qualifying assets they need to buy to run their business (office and medical equipment, machinery, etc.) But in 2014, unless the Congress acts to extend it, the limit that’s immediately deductible plunges to $25,000.
Educator's expense deduction
A tax deduction of up to $250 of out-of-pocket costs for school and classroom related supplies will expire at the end of 2013. Not sure if this whopping tax break will really be a budget buster for educators and their families, but every little bit helps.