Top 5 Year End Tax Tips

I’ve been fielding a lot of questions recently about year-end tax planning. Here are my top 5 tips to help you maximize your savings come tax time:

1. Max-out your 401(k). This should be at the top of everyone’s list due to its broad application among almost all taxpayers. Whether you are an employee of a company or self-employed, 401(k) plans and other similar retirement plans provide a great opportunity to shelter up to $18,000 of income this year — or up to $24,000 if you’re 50 or older.

2. Harvest capital losses to offset gains. Remember, capital gains and losses are netted to arrive at a total gain/loss figure for the year. If you have realized significant gains this year, it may be a good time to farm your losses to offset them. In addition, up to $3,000 net capital loss is deductible against income each year.

3. Give to Charity. Charitable contributions (both cash and non-cash) are deductible within certain income limitations. Be sure to keep track of your monetary donations, and get receipts when donating clothing and other items to local charities. To make sure you get to claim the deduction, donate before December 31.

4. Home Office Deduction. Do you use part of your home as an office? If so, you may be able to deduct expenses associated with the upkeep of your home as business expenses. There are a couple of methods for calculating this deduction, and we can help you decide which is the best one for you.

5. Auto Expenses. If you travel for business, you may be able to deduct mileage and certain other costs like car maintenance, tolls, and gas. There is also a standard mileage rate available to help you figure your deduction.

For more ideas and detailed info, click to read my year-end client letter.