You might think it’s too late to make a difference for your 2013 taxes as there is less then a week left of the year. You would be wrong. Here are six ways you can still lower that tax bill before the end of the year:
1. Increase your charitable deductions by making that donation of cash or goods now instead of when you do spring cleaning. Make sure you get a receipt and have a detailed list of items you are giving. If you are giving more then $250 in a monetary donation make sure you get a letter from the charity showing the date, dollar amount, and a statement showing what, if anything, you received in return for the donation.
2. Pay your January payments of your health insurance premiums, mortgage payments, real estate taxes, or personal property taxes before the first of the year so they will count on your 2013 return.
3. Make an additional contribution to your IRA (you actually have until the due date of the return to do this) or your employer sponsored retirement plan.
4. Make a contribution to a Health Savings Account before the end of the year or your cafeteria plan at work.
5. Get your boss to hold off paying you that bonus until after the first of the year.
6. If you have some losses that will do you good, re-balance that stock portfolio now and use the losses to offset your gains and for a deduction of up to $3000.
Here are four ways to help get your new tax year off to a good start:
1. Tax rates are going up! Pay yourself by decreasing your taxable income while increasing your contribution to pre-tax retirement plans like your 401k.
2. Re-balance your taxable investment portfolio to take gains early in the year. The new Net Investment Income Tax may be a factor based on your total income for the year and you can take losses to offset later in the year if necessary.
3. Look at shifting some of your after-tax investment portfolio into tax deferred investments. This will not only help with the investment tax increase, it will lower your taxable income.
4. For those of you in states with no state income tax, remember the optional state and local sales taxes provision for your itemized deductions will expire on 12/31/13. Unless Congress extends it retroactively (and they have before) your itemized deductions will probably go down for 2014.
In accordance with Circular 230 Disclosure
Anything and everything taxes. I also write the Louisiana State book to go to our new Income Tax Course learners and the state-wide training for upper level Tax Professionals. I am an Instructor of all levels of tax related classes. I love to teach and write as well as taking the absolute best care of my clients all year round.
26 years in Law Enforcement (13 in the Air Force and 13 at the Bossier City PD), 20 years doing income taxes professionally.
My goals now are to spend many years being my 3 grandchildren’s MeeMaw, taking the absolute best care of my clients, and continually learning new things.
Specialties
Taxes! I specialize in military, states, small business, and rentals.
The postings made on this site are my own and do not necessarily represent HR Block’s positions, strategies or opinions.
6 comments on “Top Ten Personal Tax Deductions For 2013 And 2014”
Why do you ask to defer income while claiming that tax rates are going up. This doesn’t sound like a solid advice.
Thank you for your question. My advice was broken down into 2013 and 2014. Depending on someone’s individual situation, even with overall tax rates going up, deferring income from a higher income tax year into a lower income year can help. As an example, if I was retiring in early 2014 and knew my total income for 2014 was going to be significantly lower then in 2013, I might want to push the payout for my accrued vacation and sick leave from 2013 into early 2014.
Thank you for your answer. On the same hypothetical situation, if somebody is under AMT, and expecting significantly lower income in 2014, it will make sense to defer all tax deductible expenses to 2014 – correct?
Depending on the specific situation, yes in most cases. As long as the expenses you are deferring are items that are limited or excluded under AMT. Sometimes it can be better to take the AMT hit in one year if you know you will be eligible for the credit in the following year. It’s all about projecting and planning with your clients. Please let me know if there is anything else I can do to help.
Hi Mrs Morgan,
I am canadian accountant looking for some experience in US Tax field. I need some advises and resources to learn US tax system with lower cost possible. Thanks
There are several online courses for learning the basics of the US tax system. NATP.com is a good one for beginners. Also Jenningsseminars.com and ASTPS.com. If you are dealing with US citizens working or living in Canada or Canadian citizens working or living in the US that is way beyond basic tax preparation. I would recommend that you liaise with someone in the US or another tax pro in your area who has some experience. I would be happy to consult on preparing US returns for you during the season. You can connect with me directly via the “connect with Me” button in my profile (select the link below) if you are interested or you can search for a tax pro near you using the search tool on TaxConnections.
https://www.taxconnections.com/profile/Kathryn-Morgan/12258152
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