How to Save on Your Taxes At The End of the Year

Diligent planning is essential to keeping tax obligations low. Even though your federal income-tax return isn’t due for a few months, you may want to spend some quality time with your tax situation soon and consider strategies that could help lower your tax bill. Feel free to contact The Neal Group, LLC, a trusted Milwaukee, WI accounting firm, to see if any of the following are appropriate for you. We can assist with any of your Tax Preparation Needs.

Feather your nest egg

Deferring more of your pay to your employer’s retirement plan before year-end can reduce your tax bill, since you don’t pay current income taxes on your pretax contributions. By increasing the amount you contribute, you’ll also have more invested for retirement.

You may be able to deduct all or part of the contributions made to a traditional individual retirement account. Ask your tax advisor about the deduction requirements.

Be charitable

Increase your itemized deduction for charitable contributions by donating to your favorite charities by the end of the year. Donating with a credit card entitles you to the deduction on your income-tax return even though the December charges won’t appear in your account until January.

Sell your underperformers

An investment that has lost value since you acquired it and doesn’t show signs of improving may be ripe for selling. Capital losses are fully deductible to offset capital gains and up to $3,000 of ordinary income each year ($1,500 if married filing separately). Excess losses that you can’t deduct for this year can be carried over to future years.

Take your profits

Selling an appreciated investment and using your losses to offset your gains can be a smart tax move. But remember that taxes should never be your only reason for buying or selling investments.

Bunch expenses

Unreimbursed employee business expenses, tax preparation fees and certain other miscellaneous expenses are deductible only to the extent they together exceed 2% of adjusted gross income. Common business expenses that may qualify for the deduction include home office expenses, professional dues and subscriptions, costs related to business travel, required uniforms or work clothes and job search costs.

To learn more about tax preparation, give us a call today at 414-325-2040. Our knowledgeable and trained Milwaukee Tax Accountants are here to help.