Need to do end of year tax planning? You’re not alone.
In today’s volatile tax climate, it’s imperative that taxpayers stay on top of any changes that may occur. That way, they’ll be better prepared when tax time rolls around.
To that end, we’ve compiled this handy guide, which outlines some last-minute end-of-year tax planning tips you can try out today.
Let’s explore some last-minute tax planning tips you can use today. Read on to learn more.
1. Claim Your Tax Credits Early
One of the tax tips and tricks for end of year tax planning is to claim your tax credits early. This will help get the most out of the credits you are eligible for and will make it easier to file your taxes come April.
To start, be sure to check what credits you’re eligible for—for example, social security contributions and medical expenses. After gathering all of the necessary information, use the credits to offset any future payments you may owe.
2. Max Out Your Employer’s Retirement Savings Plan
One of the best things to do is max out your employer’s retirement savings plan. Doing so will help you lower your taxable income, and can even lower your tax rate if you’re in a higher tax bracket.
Depending on the plan, you could potentially contribute up to $19,500 for the 2020 tax year, or another $6,500 if you are age 50 or older. If your employer offers a matching contribution, you can increase your savings even more while lowering your taxable income.
It’s important to keep in mind though that you must put the money in before the end of the year in order to receive the benefit of the tax saving.
3. Max Out Charitable Donations
Maxing out charitable donations can be a great way to lower your tax bill by the end of the year of tax planning. Gathering your receipts, noting the amounts you donate, and tracking down the charities you give to can take some sorting, but it’s a great way to lower your tax bill.
Before the end of the year, it’s wise to check with your accountant and ensure that all of your donations are in order and you will receive the best possible deduction. Donations to qualified charities are deductible, so make sure to research your donation and keep your records to claim the amount you donated on your taxes.
4. Leverage Tax Software
When it comes to end of year tax planning, it is never too late to get a head start. An accounting tool just like Finvisor can make the planning process less stressful and even help you maximize your deductions.
Estimate your expected results and consider when and how to trigger capital gains or losses. Look for investment opportunities that may be still available and check for deductions that may apply to your situation.
Analyze your accounts, prepare quarterly estimates in line with current trends, and strategize deductions applicable for the calendar year.
Utilize The End of Year Tax Planning End of year tax planning may be overwhelming, but with focus and foresight, you can stay ahead of the curve. Utilize these last-minute tips to get organized and ahead in the tax planning game. For further customized advice on how to plan your taxes, contact a CPA to get the best advice and plans for your finances.