By Robyn A. Friedman
Ah, December. A time for family and festivity, pumpkin pie and sugar plums, tinsel and . . . taxes?
You bet. Experts say the end of the year is a great time to assess your tax situation and make any necessary tweaks. The bottom line: It’s not too late for savvy taxpayers to save money on their 2013 taxes.
“When you talk tax rules to most people, their eyes glaze,” says Mari Adam, a certified financial planner in Boca Raton. “It sounds complicated so they’re going to put it off. But people should just take 15 minutes to think and do one or two things because it really can make a difference.”
Here are just a few of the strategies you should be discussing with your tax professional now:
Funding your retirement plan: Whether it’s an IRA or a 401(k), you can dramatically cut your tax bill — and help secure your future.
Documenting sales tax: “For 2013, you have the ability to deduct sales tax because we don’t have a state income tax, so look at all of your expenses to see what you paid in sales tax,” says Marjorie A. Horwin, CPA, who heads up the Private Client Wealth Services Group at accounting firm Morrison, Brown, Argiz & Farra. If you purchased a car in 2013, for example, that could be a sizeable deduction.
Harvesting capital gains: Consider selling assets to offset any gains and to make the most of capital gains rates.
Accelerating income: If you’re looking at higher taxes next year — and some higher-income taxpayers are — accelerate income into 2013. Conversely, if you’ll be in a lower tax bracket in 2014, defer year-end bonuses and accelerate deductions.
Discussing DOMA:. If you’re a legally married same-sex couple, talking to a tax advisor is crucial. Since the U.S. Supreme Court struck down part of the Defense of Marriage Act, you may be able to file a joint tax return or be entitled to other federal benefits; Adam says the rules are still in flux.
Expensing business property: You can elect a Section 179 deduction to write off the cost of qualified business property purchased in 2013.