As the year comes to a close, now is a good time to think about those last minute ways to save a little more on your taxes. Let me know which ones you choose to explore and as always, make sure to consult a tax pro as each situation is a little different!
1) De clutter, take all those clothes, shoes, appliances etc that you never use – take a photo, itemize the items and assign them an approximate thrift store value (you can use this Salvation Army Donation Value Guide to help assess the value). Get your receipt when you drop off by December 31 and enjoy the tax deduction
2) If you can, increase or max out your 401K through the end of the year. This puts money away for retirement and lowers your taxable income too!
3) Open an HSA (Health Savings Account). If you qualify, money you put into the HSA will reduce your taxable income.
4) For 2017, if you know you’ll owe the state money when you file your return next tax season, pay your State taxes before December 31 to get the added deduction. If you pay your taxes quarterly, make the last payment in December instead of January. It’s looking likely that the tax deduction for state taxes is going away in 2018 so make your payments in 2017.
5) Make your January mortgage payment by December 31 to get the mortgage interest from the 13th payment included in your interest deduction on your principal residence.
6) Do you have any investments that are currently showing a loss? If you don’t foresee that turning around anytime soon, sell the investment and capture the loss. You are able to offset any capital gains plus claim an additional $3000 in capital losses each year which will reduce your taxable income.
7) Are you hanging on to any non-business bad debts, hoping to be repaid even though the outlook is grim? You have a month to prepare to claim this as a capital loss but steps need to be taken now. You must document that it was a legitimate loan and also document that it is no longer collectible. For instance, the borrower went bankrupt, you sued in small claims and still didn’t get paid, the borrower is experiencing some major hardship that makes the paying back of the loan impossible, you’ve tried to collect but can’t find the borrower….
8) Have you been putting off getting solar panels? At this point, the tax credit is still 30 percent but that is scheduled to go away after 2019 so now is as good a time as any to invest in those panels.
I hope this helps you out. What about you? What are some surprising ways you might try and save on your taxes?
We’ll chat later!