Author: Dina Barabash, NASBA Content Development & Web Specialist
Posted: December 28, 2017
Is it just me, or does each year seem to fly by more quickly? It’s hard to believe we are nearing the end of 2017. While you may be thinking about your holiday plans and New Year’s resolutions, you should also be thinking about your impending tax filings. While this may not be at the top of your to-do list, it should be! Let me explain…
Making sure your finances are in order at the end of the year gives you time to make financially sound decisions and helps you save on your 2017 taxes. So, whether you are planning for your retirement or a vacation, here are some tax tips that may save you some money and bring you holiday cheer!
One way to potentially lower your tax bill is by accelerating deductions, i.e. contributing to charity. Rather than donating cash, consider donating stock or property to increase your tax benefits. In fact, if you have owned the asset for over one year, you will receive a double tax benefit from your donation. As with all donations, be sure to save a receipt that verifies your contribution.
Contributing Toward Your Retirement
A great way to save for your retirement is by contributing to a tax-deferred retirement account because your money compounds over time tax-free. If your company offers a 401(k) plan, it is a good idea to contribute the maximum amount allowed or, at the least, however much will be matched by your employer.
Save with Flexible Spending Accounts
By putting money into a flexible spending account (FSA), you can use your money for qualified medical expenses tax-free. Use these funds for prescription medications, reading glasses, copays, medical procedures, and more. If you find that you have unused funds in your FSA at the end of the year, don’t let them go to waste! Consider scheduling that appointment you have been putting-off or renewing a necessary prescription.
Know the Tax Codes
Tax codes are ever-changing, and it is important to know about Congress’ recent decisions. Take this time to speak to a licensed tax professional in your area about how you can prepare for changes and what changes, if any, may mean for your current circumstance. Once you’ve met with a CPA, you can file your taxes with ease and piece of mind!
No 401(k), No Problem
If you do not have the option of contributing to a 401(k), consider contributing to an IRA! This is another way that you can save toward retirement and reduce your amount of taxable income. And if you are self-employed, you can contribute to an SEP IRA, which is like a 401(k) in that your money is not taxed. However, the money is taxed as ordinary income the moment you withdraw from the account.
Buying stock can be a great investment. But if you have stocks that cause you to lose money, consider selling them. Selling your stock can help you deduct up to $3,000 on your federal taxes! Just be sure you are not violating the wash sale rule, which states you cannot purchase the same or a substantially similar stock within 30 days before or after the sale.