It may sound crazy, but there are all kinds of moves you can make this time of year to pay less when you do your income taxes. We’ve compiled 12 year-end tax tips – a homage to The 12 Days of Christmas – below. For most of the savings, you’ll need to itemize your deductions. It’s a little more work, but it could mean a bigger tax refund. Just follow these steps and start saving.
Day 1: Add
Add money to your retirement plan, if you can, to lower your taxable income. You have until April 18, 2016, to set up a new Traditional or Roth Individual Retirement Account or add money to an existing one. Check out this IRA Tax Guide.
Day 2: Subtract
Take money away from your Flexible Spending Account (FSA). In other words, spend FSA money on eligible expenses like glasses, contact lenses or hearing aids. You may be able to carryover $500 into next year, but you may not. Use it, so you don’t lose it.
Day 3: Give
Donate money to a qualifying charity. Keep bank records and documentation from the organization with the date and amount contributed.
Day 4: Take
Take clothing and household items like furniture, furnishings, electronics and appliances to a charity as a donation. Help others as you help yourself. You can deduct the fair market value (what they’re worth now, not when you bought them) of your donations.
Day 5: Buy
Purchase necessary equipment and supplies if you’re a business owner. Business expenses are deductible in the year they are purchased.
Day 6: Sell
Unload those loser stocks or mutual funds to offset the capital gains that will add to your taxable income.
Day 7: Check
Check your health insurance status. If you need to enroll or re-enroll in state or federal Marketplace plans for 2016, you can do so until January 31. Enroll by December 15 for coverage starting January 1. Why is this a tax tip? Because you’ll pay a tax penalty if you don’t have health insurance.
Day 8: Double-check
Double-check your withholding. Make sure you’re not having too much or too little taken out of your paycheck. Try this withholding calculator.
Day 9: Pay
If you’re in school, pay next semester’s bill now, if possible. You can claim your payment on your 2015 income tax return.
Day 10: Pay again
If you’re self-employed and pay estimated taxes, pay your outstanding balance this month.
Day 11: Hire
A professional tax preparer will make sure you get all the deductions you deserve. 5 Tips On Choosing Your Tax Preparer.
Day 12: Fire
Light a nice, toasty fire in the fireplace, and relax. After you’ve done all the above, you’ll need a break.
For one-on-one support, contact your nearest Liberty Tax office. Follow us on Facebook and Twitter to stay up to date on tax tips as we get ramped up for 2016. Leave us a comment below and let us know how you’re preparing!
Disclaimer: Tax Lounge is an informational source for industry news and related topics. We take every effort to provide honest and accurate tax information, but this information should not be a substitute for professional tax advice. Use our office locator to find your local tax office or subscribe to our free newsletter.