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Get Proactive Now To Make April 15th. A Little Less Taxing!

By Maryann Giacobbe

Real Estate Sales Representative with Houlihan Lawrence

November 12, 2012 11:18 PM

Topic Summary: Get Proactive Now To Make April 15th. A Little Less Taxing!

There are several steps you can take now to make sure you reduce your tax bite come April of next year. But you have to start preparing!

The easiest tax reducing measure that most homeowners with a mortgage can implement is making a 13th mortgage payment right before the end of the year.(so start saving) As many homeowners use their mortgage interest paid as a income deduction, adding a 13th payment ( or even paying January's early) right before December 31st can save on average $125 in taxes. Before you set the budget for holiday spending, see if a last minute payment can be made.

Remember: Both the payroll withholding tax and self-employment tax rates have been reduced by 2 percentage points for two years. Payroll FICA withholding will return to 6.2% (up from 4.2%) and self-employment tax will return to 12.4% (up from 10.4%) beginning in 2013,. The result: most wage earners will have reduced take home pay

If you normally get an "end of year bonus", get ready to ask your employer if they can defer it to 2013 so the added income will not be counted as income for THIS YEAR.

Have you maxed out your 401K contributions? Have you taken advantage of your Flexible Spending Accounts, or Health Savings Account?

Review your medical costs - Keep track of your un-reimbursed medical expenses all year long. You can deduct them only if they're more than 7.5% of your AGI. If you're close to the 7.5% requirement, you might consider having an elective or necessary procedure before year-end.

If you want to help any grandchildren with college, you can send a tuition payment directly to the college and the amount won't count toward the $13,000 gift-tax exclusion. ( see IRS Resource HERE) Or you may be able to get a state tax deduction or credit by opening a state-sponsored 529 college-savings account.(info here) The money in the account grows free of federal and state tax, and it can be used to pay school expenses. To see the tax breaks for your state situation, go to Saving For College

In the next edition we will go over some of the tax changes to expect in 2013, given President Obama's re-election