We're only a few short weeks away from the end of the year. If you think that it's too late to make an impact on your tax bill next year, don't worry. There are a few things you can do from now until the end of the year to lower your taxable income, so you can hopefully reduce what you owe or earn a return. David Stewart of Bowling Green, KY offers several easy tips to mix in with your shopping and Christmas parties.
Donate to More Charities: It's the season of giving, right? If you don't take the standard deduction and itemize your deductions instead you may be able to lower your tax bill through charitable deductions. If you have extra cash or items that you have been considering donating, make sure to keep your receipts come tax time. You may be able to deduct your time and travel costs as well, but you should speak to your accountant for more information.
Make a Contribution to Your Retirement Account: Did you know that you can make up to a $17,500 contribution to your 401K each year. It's $5,500 for IRAs. By maximizing your contribution, you will not only be saving for your future; you will also be saving on your tax bill for this year as you can deduct your contribution from your taxable income.
Make Prepayments on Your Mortgage: Another thing you can do to reduce your taxable income is take a look at opportunities to make prepayments on things for next year. For example, by making prepayments on your mortgage or property taxes, you should be able to use the interest and tax payments you make for further deductions.
There is still time to reduce your tax bill for this year. However, remember to do everything by the book. David Stewart warns that tax evasion is a serious crime that could be punishable by penalties or even jail time. If you have any questions about what could be considered tax evasion, you should definitely speak with your accountant or tax attorney. The key to maximize your return is to reduce your income through legitimate practices; not openly hide your income. Use these and other strategies your accountant may recommend to successfully reduce your tax bill, so you can start 2016 with a nice tax return.
