Here are a five last-minute tax saving ideas. But act soon, the tax year is quickly nearing an end.
- Make a late-year charitable donation. Even better, make the donation with appreciated stock. You can often receive the higher value donation without paying capital gains.
- Make contributions to your retirement plan AND take any required minimum distributions from your retirement accounts. The penalty for not taking minimum distributions can be high.
- Take any final investment gains and losses. Net your capital losses against your higher taxed ordinary income whenever possible. You can also take up to $3,000 in capital losses each year.
- Gather up non-cash items for donation, document the items, and give those items in good or better condition to your favorite local charity.
- Consider making any final gifts to dependents. While the "kiddie tax" may require applying your tax rate to your children's earnings, there is an amount that is taxed at their, usually lower, tax rate.
Reminder: Remember to avoid putting cash in the kettle. While it may "sound" good, writing a check is a much better idea as cash donations are now no longer tax deductible without a receipt, canceled check, or statement.