As 2012 comes to a close and tax season looms around the corner, it’s the perfect time to review your finances and explore options for additional year-end tax savings. Some tips include, becoming educated on the newest tax laws, making an additional mortgage payment, and making charitable donations – especially in the wake of Hurricane Sandy.
Now is also a good time to assess where you are with your financial plan, question if you’ve met your financial goals, and adjust your personal or family budgets. Below are several strategies to consider as you prepare to close out the year and start the New Year in a strong financial position.
Tips For Year-end Tax Preparation
Meet With Your Financial And Tax Advisors. Review your year-end statements and discuss your finances with a financial advisor. There are new tax laws and other financial strategies you should discuss with professionals. Get advice on preparing for tax season and what tax credits you are eligible for. Once you’ve reviewed the past year, talk about your financial plan for the upcoming year.
Learn The Newest Tax Laws. You can visit the IRS website for up-to-date tax information, but here are some key takeaways for 2013 tax season. In 2013 it appears dividend income will likely be taxed as regular income. This means taxes on qualified stock dividends could increase substantially for some of us. Capital gains taxes for high earners will probably increase to 20% from the current 15%. Under certain circumstances you can deduct up to $3,000 of capital losses from your 2012 ordinary income. If you have over $3,000 in capital losses, the excess rolls over into 2013.
Make A Charitable Donation. You can donate money, clothing, cars, boats, electronics, and other household items to charitable organizations. Be sure the organization is reputable and ask for a receipt for your tax deductions.
Make An Extra Mortgage Payment. Make an extra mortgage payment every year, if you can. The savings will add up on the interest you pay on your mortgage over time, potentially saving you tens of thousands of dollars.
Check With Human Resources For Benefits. If you’re contributing part of your paycheck to a health savings plan at work, you may have to “use it or lose it” before year-end. Confirm this with your HR representative.
Cut Your Losses. You may want to consider taking the losses on your stock holdings to offset any stock gains you may have this year. If your stock losses are greater than your stock gains, you can deduct up to $3,000 in losses this year and carry over the remainder. Just remember, the stock trades have to settle by year-end.