It’s holiday time, not tax time. After all, you want to be trimming the tree not thinking about Form 1040. However, now might be the perfect time to get a head start on those schedules, and more importantly, do some end-of-the-year tax planning.
The key part of taxes is that they encompass everything within the calendar year, meaning that if you want to include something when you do your taxes next year, you’ll need to have it done by December 31st of this year.
Stock up. If you’re self-employed, stocking up on supplies before the end of the year is not only a great way to hit the ground running in January, but it means you can also expense them, potentially lowering your taxable income.
Contribute. An IRA is more than just a good way to save for retirement. It’s also a way for you to potentially lower your tax bill. Depending on your age, you may be able to make a contribution of up to $6,500 dollars to an IRA, directly subtracting from your taxable income and possibly pushing you into a lower tax bracket.
Pay off those doctor bills. If you’re planning on itemizing your medical expenses, make sure you actually make the payments before the end of the year or they won’t count on this year’s taxes.
Sure, this time of year you’d rather have sugar plums dancing in your head than tax schedules, but a little planning now can save you big bucks when April 15th rolls around.