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IRS Issues Year-End Tax Tips

December 17, 2013

The IRS has issued tax tips to help taxpayers save more on taxes in 2013. The tax filing season will probably begin in Jan, 2014, if the IRS does not delay it further. When preparing taxes for 2013, keeping these tips in mind will help you to save more tax dollars.

Make Charitable Contributions
If you plan to give to charity, consider making a donation before the year ends. Your contribution can be claimed as an itemized deduction for 2013 if you make it before January. This includes donations you charge to a credit card by Dec. 31, even if the bill is paid in 2014. A donation by check also counts for 2013 as long as it is mailed in December.

For taxpayers who are 70½ years or older, the qualified charitable distribution allows tax-free transfers from your IRAs to a charity. You can make donations up to $100,000 per year from your IRA to an eligible charity, and exclude the amount from your gross income. You can use the excluded amount to satisfy any required minimum distributions that you must otherwise receive from your IRAs in 2013. This benefit is available even if you do not itemize deductions. Take advantage of this provision now because it is set to expire at the end of 2013.

Contribute to Retirement Accounts
If you want to make contributions to your 401(k) or similar retirement plans count for 2013, you will need to make contributions by Dec. 31. However, taxpayers still have until April 15, 2014, to set up a new IRA or add money to an existing IRA and still have it count for 2013.

The Saver’s Credit, also known as the Retirement Savings Contribution Credit, is designed to assist low-and moderate-income workers save for retirement while earning a special tax credit. Eligible workers who contribute their IRA, 401(k) or similar workplace retirement plan may receive a tax credit on their federal tax return of up to $1,000 for individual taxpayers and $2,000 for married couples.

It is advisable to have a filing system for your tax records so that you are organized and do not lose receipts and important tax documents. It can be as simple as saving receipts in a shoebox, or more complex like creating folders or spreadsheets. Keeping good records help to save time when preparing taxes and also help you to accurately file tax returns.

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