It’s that time of the year again – as the last days of 2011 dwindle down and new hopes are made for the new year, consumers are starting to prepare for the dreaded tax preparation time.
If you have been keeping up with your financials tax time made not be much of a hassle for you. But if you are like many consumers who end up waiting until the last minute, tax time may be particularly stressful especially when you find out you are going to owe Uncle Sam.
There are some things you can still accomplish related to your taxes to help you out financially and prevent you from having to pay out to the IRS. Here are some end of the year strategies to improve your tax situation:
Pay More On Your Home
If you have the resources in your holiday budget, you can pay more towards your mortgage to save on taxes. If you can make the January payment by December 31, you can deduct the additional interest paid.
Pay More on Property Taxes
You can lower your tax bill by making an early property tax payment. While most real estate tax invoices are not due until January or later the following year, you can make an early payment and itemize the deduction from your taxes.
Pay More Estimated Taxes
You can make a tax installment payment for the fourth quarter in December rather than waiting. This payment will help decrease the amount of money you owe to your state for income taxes.
Account for Itemized Deductions
If you have been good about keeping receipts for your expenses throughout the year, you can get serious about itemizing these expenses as tax deductions. Check with your CPA about legal deductions but you shouldn’t neglect popular deductions like business expenses that were not reimbursed, seminars and classes related to your career, any licenses or business legal fees paid out, and your work uniform and accessories you purchased out of pocket.
Before the end of the year, make a donation to your favorite local charity. You can write a check, donate via a check or credit card, or give used clothing, household items, or even your old vehicle to charitable organizations. The donations will require a receipt from the organization but you can include the charitable acts on your tax deduction form.
While it can be frustrating to have to recap a year’s worth of financial information, let the frustration be a lesson to you in proactive tax preparation year round. Keep a notebook and an envelope on hand to store all tax-relevant documents for next year in one place so you’ll be more inclined to keep track progressively throughout the year rather than all at once.