The end of the year is just around the corner (next week, yikes!) and it’s about that time again. Time to get your tax information together so that you can provide your accountant with everything he or she needs to prepare your income tax returns for the new year. Of course, that’s not fun. No one likes filing their taxes, writing a check to the government and saying goodbye to even more of your hard-earned money. However, it happens and we all have to deal with it. Fortunately, there is still time to get ahead and prepare so that you can lower your tax liability in time to file that income tax return and save just a bit of money. Each of these is a simple, easy way you can lower your tax liability, all within your means. Your taxes have to be filed, so you might as well do what you can to make them as inexpensive as possible.
Pay an Extra Mortgage Payment
On or before the last day of the year, pay that first mortgage payment of the year. Sending it in a day early can lower your tax liability if you itemize your deductions. This will increase the mortgage interest you pay, which will lower the amount you have to pay as far as your taxes go. Just make sure that the payment is received by your mortgage company before the year is over to ensure you will get this deduction.
Buy a New Car Now
You can deduct the cost of a new car – or the sales tax from it – on your federal taxes. If you’ve been discussing the possibility of buying a new car, now is the time to do it. Get it purchased before the last day of the year and you can write off all that sales tax and lower the amount of money you owe the government.
Donate Something to Charity
If you’ve been in the mood to clean out the garage or the attic or the children’s bedrooms, now is the time to do it. If you donate some of your belongings or your money to charity, you can write off that expense at the end of the year on your income taxes. This is going to help you lower that liability even further.
Start a Roth IRA
The good news about this type of IRA is that there is no minimum contribution, which means you can put as much in here as you want and benefit your tax situation. However, before you convert to one of these accounts, speak to your accountant about the best way to do so in a manner that will benefit you come tax filing time, since this is not the account for all people.
Pay Your Property Taxes
If you get those property taxes paid before the year is over, you can deduct them on your income tax return. Technically, they were already due. However, you have a bit of additional time to pay those taxes, which means that you get to write them off if you pay them before the year is out.
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