If you planned your taxes at the beginning of the year, you’re definitely ahead of the game. However, before the year ends, it’s smart to ensure that you save the maximum in taxes by investing and spending right. Here are some of the crucial factors that will impact how much you pay in taxes this year:
1. Your Income Bracket
If any income that you are due to receive at the end of the year will move you into a higher tax bracket, then you may want to see about postponing until the next year. For instance, if you are due a bonus in December that will push you over in income threshold into a higher bracket, you may request to receive it in January. You may also want to postpone selling assets, if you think this will produce more income for you.
2. Save More
The end of the year is the time to fund your 401(k) or other retirement account. Saving now will also prevent you from overspending during the holiday season.
3. Give Away
If you contribute to charity, you may reduce your tax liability. If making a slightly larger charitable contribution drops into a lower tax bracket, then you can plan your donations accordingly.
When you contribute to charity, make sure that it’s an eligible organization. Only qualifying charities are exempt from taxes. Also, keep any contribution receipts for record keeping. The receipt must have the name of the organization, the date the contribution was made, and the amount of the contribution.
Planning your savings, investments, expenditures and income at the end of the year can help you to save the most in taxes. All you need to spend is a little effort and time.