What Tax Moves Can You Make In December?

Identify and pre-pay deductible expenditures

In our last “tax move” post, we suggested taxpayers look at all the options they have for lowering their tax bill due in 2014.  Here are some more possibilities:

January house payment – Prepaying your mortgage will give you 12 months of deductible interest.  The same for a vacation home.

State & local taxes – By preparing state and local income and property taxes due in early 2014, you can reduce your 2013 federal income tax bill because your itemized deductions will be that much higher.

Charitable Donations – The IRS maintains a list of those organizations that are recognized to receive tax-exempt contributions, however they no longer publish Publication 78, Cumulative List of Organizations described in Section 170(c) of the Internal Revenue Code.  Instead, they have created a portal that permits you to search for your charities to be sure they are IRS compliant. 

Medical Expenses – Medical costs are only deductible once they have exceeded the 10% of AGI (Adjusted Gross Income).  For those who are 65 or older (or spouse) as of year-end, your rate is better at 7.5% of AGI. 

Miscellaneous Deductions – Job hunting expenses (resumes, composition, postage, stationery, etc.), fees for tax preparation services and consultation, and unreimbursed employee business expenses.  Road warriors should take notice – these expenses are only deductible once they exceed 2% of your AGI. 

As always, we encourage you to seek the services of a tax professional, rather than trust your filing accuracy and security to someone who doesn’t know you, your business or the intricacy of the United States Tax Code.  You want someone who can represent you before the IRS. 

Sources: MarketWatch, Wall Street Journal