now you’re probably thinking more about Santa Claus
than Uncle Sam.
a little attention to Uncle Sam between now and the end
of the year may make his visit less painful when you do
your tax return in a few months. Consider some
relatively simple moves now so you can maneuver through
your 2015 return with options to keep your taxes down.
the extras: Whether you have clothes, cars or household
items like furniture you no longer want, deliver them to
charity so you can get a deduction. Just make sure it’s
a recognized charitable organization. Provide the
organization a list, including value, of each item and
keep a copy along with a receipt.
kind to your future: Everyone knows they should prepare
for retirement, but most people save far less than they
should. So get on top of this now, and save taxes while
doing the right thing for your future. Consider your
401(k) retirement savings plan, or start or fund an IRA
away from work. Say you are in the 25 percent tax
bracket and put $1,000 into your 401(k) before the end
of the year. You will only be taking $750 out of your
pocket because you will be saving $250 on taxes. You can
put up to $18,000 in a 401(k) if under 50 and $24,000 if
50 or older. The maximum for an IRA is $5,500 if under
50 or $6,500 if 50 or older. You have until April 15 to
make deposits in IRAs. For a tax deduction, use an IRA,
not a Roth IRA.
sweet home: If you pay your January 2016 mortgage
payment before the end of this year, you will be able to
deduct the interest in 2015. Likewise, if you have
property tax due right after the start of the new year,
pay it now and deduct that in 2015 too.
on college: If you are in college or have children in
college, you can claim the American Opportunity Tax
Credit on as much as $2,500 per student. So if you haven’t
spent that much this year but have payments coming due
early in 2016 for tuition, fees and course-related
expenses, pay now. Even computers can qualify. This is a
"refundable" credit, meaning: If you claim it
and it wipes out your taxes completely, you can still
get a benefit — a refund of up to 40 percent. The
credit is available for undergraduates for four years.
If you’ve exceeded that, or are in graduate school, or
taking courses to enhance your work skills, pay in 2015
for the Lifetime Learning Credit. See the IRS site.
to the doctor: There are several types of
"miscellaneous" deductions possible, and
perhaps the most popular is for medical expenses. The
trouble is, your medical expenses must be more than 10
percent of your adjusted gross income, or 7.5 percent
for seniors. You can add more before the end of 2015.
Consider lab tests, dental work, glasses, medicine,
hearing aids, or even surgeries you are planning.
Meanwhile, if you have a flexible spending account at
work that needs to be used up before the end of the
year, make sure you do it.
to charity: The most effective way to give is to
contribute an asset like a stock, bond or mutual fund
shares directly to the charity, which doesn’t have to
pay taxes. So once it has your asset, the charitable
organization will sell it and get the full benefit of
your donation. If you sold it instead, you’d have to
pay taxes and would have less to give away.
poor investments count: This has been a year of big
losses in the stock market. If you want to get rid of a
losing stock or fund, and have also sold winners, you
can use the losses on the stinkers to keep your taxes
down on the winners. Remember, however, this doesn’t
apply to 401(k)s or IRAs, and the loss is tallied from
the time you bought the investment, not just a loss in a
single year. If you offset your gains and have leftover
losses, the IRS allows you to use $3,000 to offset other
income. If there are still leftover losses, you can
carry them over to future years.
income: If you have a regular job, this is easier said
than done. But if you can control when you get income,
you can control the tax bill, to some extent. If, for
example, you have a bonus coming, or can delay some pay
for a couple of weeks, arrange to get it in January
rather than 2015. If you have a small business and are
just completing some work for a client, bill the client
at the end of December so you get paid in 2016. But
beware. If you think you are going to make more money
next year than this year — you may want to get paid
now rather than waiting.