Instead of wracking your brain over what color sweaters you'll give to your loved ones this holiday, you might want to consider ways in which you can still reduce your 2014 tax bill.
MarketWatch lists several, including:
- "Prepay deductible expenditures. If you itemize deductions, accelerating some deductible expenditures into this year to produce higher 2014 write-offs makes sense if you expect to be in the same or lower tax bracket next year," writes MarketWatch's Bill Bischoff.
- "State and local taxes. Prepaying state and local income and property taxes that are due early next year can reduce your 2014 federal income tax bill, because your total itemized deductions will be that much higher.
- "Give to charity." Making donations this year that you would otherwise make next year will push your itemized deductions that much higher this year, trimming your tax bill.
- "Option to deduct state and local sales taxes instead of income taxes." If your state has no personal income tax or a small one, you can deduct your sales taxes instead, assuming Congress renews this option.
Accounting firm Grant Thornton offers the following year-end tax tips:
- "Accelerate deductions and defer income. Deferring tax is a cornerstone of tax planning.
- Bunch itemized deductions. Many expenses can be deducted only if they exceed a certain percentage of adjusted gross income.
- Leverage retirement account tax savings. It’s not too late to increase contributions to a retirement account."
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