Increase the contribution to your 401k or 403b. The maximum contribution for 2012 is $17,000 with a catch up contribution of $5,500 if you are over 50. If you have not maximized your retirement plan consider increasing the amount withheld for the remainder of the year.
Make miscellaneous payments. Costs such as union or professional dues, job related educational expenses and subscriptions to business publications are deductible as itemized expenses as long as you enough of them. The total miscellaneous expenses must exceed 2 percent of your adjusted income before you can write them off.
Spend your FSA money. Some companies allow a grace period until March 15 for using the FSA money but many don’t. In those cases, if you don’t use your FSA money, you lose it.
Give money to family members up to $13, 000. If you have a large estate you can reduce potential future taxes by giving away up to $13,000 to anyone you want and there aren’t any gift tax issues for you or the recipients.
Donate to your favorite charity. If after all of your shopping is complete and you have excess cash, consider sharing it with those less fortunate. Not only is it great way to get in the Christmas spirit, if you itemize you can deduct your charitable gifts. You can also give away household items and clothing that is in good condition.
Dump losing stocks. If you have holdings that did not do well this year, now may be the time to get rid of them. If you have capital gains the losses could offset your earnings, reducing or eliminating any tax you owe. Even without any gains you can use up to $3,000.00 in capital losses to trim your ordinary earnings. If you have more than $3,000 in losses the excess can be carried over to future years.
With the holidays quickly approaching and the end of the year not far off, now is the time for some last minute ideas to help curtail the tax bill that may be looming.
In keeping with the spirit of the holidays every day over the next 12 days I will post 12 Tax Tips for Christmas.
On the first tax tip day, make your January mortgage payment early. By getting the payment to your lender by the end of the year, the interest on that payment can be deducted on this year’s tax return if you itemize. Just be sure the payment is received by your lender by December 31.
Employer’s planning to claim an expanded tax credit for hiring certain veterans should act soon. Many businesses may qualify to receive thousands of dollars through the Work Opportunity Tax Credit, provided the veteran begins work before the new year.
Six key facts about WOTC as expanded by VOW to Hire Heroes Act of 2011.
1) Hiring Deadline: Veteran must begin work on or after November 22, 2011, but before January 1, 2013
2) Maximum Credit: The maximum credit is $9,600.00 per worker in a for-profit business or $6,240.00 per worker for tax-exempt organizations.
3) Credit Factors: The amount of credit depends on a number factors. Such factors include the length of the veteran’s unemployment before being hired, the number of hours the veteran works and the amount of wages received during the first year of employment.
4) Disabled Veterans: Employer’s hiring veterans with service related disabilities may be eligible for the maximum tax credit.
5) State Certification: Employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency. This form must be filed within 28 days after the qualified veteran starts work.
6) Efile: Some states accept Form 8850 electronically.
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