Monday, December 22, 2008

10 Year-End Tax Tips

As the end of the calendar year approaches, you should take some time to focus on your taxes. There are several things that you may be able to do to lower your bill.
  1. Review your income, expenses and potential deductions: Before you can make any adjustments, you will need to look closely at how much you are earning, spending, and saving and what you can deduct.

  2. Review your portfolio: If capital gains are high, consider taking a loss to offset some of the capital gains income.

  3. Defer income: Unless you have reason to believe that next year will bring you a higher income and move you into a higher personal income tax bracket, you may want to defer income until after the first of the year. If you are self-employed, for example, send the last invoices out late in December so you will more likely receive payment in January.

  4. Use up your flex spending plan: If you have a flexible spending plan, which means you have put aside tax-free earnings to cover medical and dental expenses through a plan offered by your employer, you need to use it up. Make doctor appointments now and buy necessary medical supplies that are covered in the plan.
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