The year will end in less than two weeks, and with the New Year, new tax laws will also come into effect. Even though the holiday season is the least convenient time to worry about taxes, a quick look at what you can do before the end of 2014 to reduce your taxes can help you save more.
Payment of Property Taxes – If you live in a state where you do not pay your property taxes in a lump sum, then you can pay your first 2015 installment in advance before the end of this year. Before that, do check with your mortgage company to see if they allow pre-payments on property taxes.
Postponing Bonuses – If you are due a bonus and your employer is likely to give it this year, you may request your employer postpone it to early next year. Also, postpone selling any used items or any activity that will generate income for you for 2014.
Advance Payment of Mortgage – To lower your 2014 tax liability, you can push your January mortgage to December 2014. By doing that, you can claim more in interest deduction for this year. Make sure that you tell your mortgage company that you want it to be counted for 2014, and send your payment accordingly.
Check News for Tax Extensions – There are dozens of tax breaks that expired in 2013 that await extension. Before you finalize your tax preparation, confirm the tax breaks that have been extended for 2014. Congress has recently approved a bill that extends these tax breaks; the bill is likely to be signed into law by President Obama next week.
Calculate Both Itemized and Standard Deduction – If you are not sure whether to use the standard deduction or itemize your deductions, you must use both to see which saves you the most in taxes. This is true especially if there was a major change in your circumstances such as switching of job, marriage, divorce, birth of a child, etc.
Planning taxes ahead can give you the benefit of saving your hard-earned money. If you spend a little time and effort in making adjustments in your payments and income now, you can minimize the potential that you’ll see a tax liability. Before this year ends, you still have time to reduce your tax bill.