Last Minute Tax Tips
While last minute holiday shopping is probably the main thing on your mind, it’s important that you don’t let your tax strategy fall to the wayside. According to Patrice C. Washington, the Money Maven of the Steve Harvey Morning Show, waiting too late could affect your ability to benefit from some time-sensitive tax advantages.
Below are three tax tips you can tackle at any income bracket.
- Make More Donations: According to the IRS, you may deduct contributions in the year they are made. Even if it is December 31st, charge your charitable gift to a credit card or get your envelope postmarked. While you may not pay the credit card bill until 2015 or the check doesn’t clear until then, you are still covered. “Don’t forget that if your gift is over $250, you must obtain a written receipt or record of the transaction from a qualified charity,” says Ms. Washington. “If you plan on donating clothing or household goods, look forward to deducting the fair market value as long as everything is in good condition.”
- Move Up Deductions: If your income will be high this year, move up payment on as many deductible expenses as you can. Pay bills that are due in January in December. Just like with charitable deductions, if the proof of payment is in December, you can take advantage of this write off for your 2014 tax bill. Ms. Washington explains that this strategy is popular with mortgage bills and prepaying estimated taxes before the end of the year. “There is, of course, a word of caution regarding this strategy,” says Ms. Washington. “If you think you will actually earn more money in 2015, and therefore be in a higher tax bracket, you might want to hold on to these tax deductions for the 2015 tax bill.”
- Monitor Retirement Contributions: If you didn’t save the max of $17,500 in your 401(k) this year, there’s still a possibility your employer will allow you to make a lump sum contribution before December 31st. If you’re over the age of 50, you still have time to max out at $23,000. April 15, 2015 is the deadline for funding a traditional or Roth IRA for 2014 with either $5,500 for those under the age of 49 and $6,500 for individuals age 50 or older. “If you’re an entrepreneur or small business owner and want to save in a solo 401(k), make sure to at least open your plan by December 31st,” adds Ms. Washington. “You will then have until the April 15th tax deadline to fund it.”