Want to lower your 2013 tax bill? The time for action is running out, so consider these tax-savers now.
* You can choose to deduct sales taxes instead of local and state income taxes. If you’re planning big ticket purchases (like a car or a boat), buy before year-end to beef up your deductible amount of sales tax.
* If you’re a teacher, don’t overlook the deduction for up to $250 for classroom supplies you purchase in 2013.
* Consider prepaying college tuition you’ll owe for the first semester of 2014. This year you can deduct up to $4,000 for higher education expenses. Income limits apply.
* Max out your retirement plan contributions. You can set aside $5,500 in an IRA ($6,500 if you’re 50 or older), $12,000 in a SIMPLE ($14,500 if you’re 50 or older), or $17,500 in a 401(k) plan ($23,000 if you’re 50 or older).
* Establish a pension plan for your small business. You may qualify for a tax credit of up to $500 in each of the plan’s first three years.
* Need equipment for your business? Buy and place it in service by year-end to qualify for up to $500,000 of first-year expensing or 50% bonus depreciation.
* Review your investments and make your year-end sell decisions, whether to rebalance your portfolio at the lowest tax cost or to offset gains and losses.
* If you’re charity-minded, consider giving appreciated stock that you’ve owned for over a year. You can generally deduct the fair market value and pay no capital gains tax on the appreciation.
* Another charitable possibility for those over 70½: Make a direct donation of up to $100,000 from your IRA to a charity. The donation counts as part of your required minimum distribution but isn’t included in your taxable income.
* Install energy-saving improvements (such as insulation, doors, and windows) in your home, and you might qualify for a tax credit of up to $500.
These possibilities for cutting your taxes are just the starting point. Contact us now for a review of your 2013 tax situation and tax-saving suggestions that will work best in your individual circumstances.
Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in the McLean and Tysons Corner, VA. Gilliland & Associates specializes known for our superior knowledge and aggressive interpretation and application of tax laws, we help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+