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Need some end-of-the-year tax tips? With less than two months to go in the 2013 tax year, many Americans are trying to figure out ways to maximize their deductions and reduce their tax bills.
You're probably already familiar with a few common strategies, like donating money to charity. But there are many other potential tactics that may work for you too.
Here are 10 year-end tax tips for individuals:
- Defer your bonus. Because income is taxed the year you receive it, try and see if you can defer any holiday or year-end bonuses into next year so that you don't have to worry about it this year.
- Rethink getting hitched. Thinking about tying the knot this year? You may want to sit down with your significant other and figure out your potential tax consequences before you make that ultimate decision.
- Postpone your billing. Similar to postponing one's year-end bonuses, freelancers and other independent workers may want to think about postponing their billing to the next tax year if it means they'll pay less in taxes for 2013.
- Contribute to your IRA. Putting money into an IRA may allow you to deduct some or all of your contribution. Remember, you can contribute up to $5,500 this year.
- Deposit into your 401(k). Much like an IRA, depositing into your 401(k) can prove to be beneficial for tax purposes by reducing your taxable income.
- Donate to charity. Charitable donations are always a good way to earn some tax deductions. Remember, however, that they must meet certain criteria -- not all donations to charity are tax-deductible.
- Go green. If you upgrade to an energy-efficient appliance, you may be able to qualify to receive a tax credit for up to $500 for the environmentally friendly updates you make -- this includes stoves, water heaters, and air conditioners.
- Pay into a flexible spending account. If your employer offers a flexible spending account, you can save by contributing to it. On top of that, both you and your employer can potentially avoid employment or federal income taxes on the money.
- Get your deductions lined up. If you're self-employed, making sure that you have all your deductions lined up now will save you time when Tax Day rolls around. While there are additional requirements for those who are self-employed, one's self-employment tax is also deductible up to 50 percent.
- Speak with an attorney. If you're feeling overwhelmed or confused about your tax situation, you may want to speak with an experienced tax attorney to help guide you through the process.
Nobody likes to do their taxes. But by planning ahead and taking strategic steps before year's end, you can make the process as painless as possible.