6 Can’t Miss End of Year Tax Planning Tips for the “Average Joe”

Here are six easy tax-saving tips that may be worth following before December 31st!

 1)      Maximize Flexible Spending Accounts (FSA):

Haven’t spent the full amount from your medical flexible spending account? Go ahead and schedule doctor appointments or medical procedures that you may have put off throughout the year, if otherwise appropriate, to take advantage of tax-deductible medical expenses.

2)      Medical Expenses:

Aside from the use of a Flexible Spending Account (FSA), medical expenses are only tax deductible if they exceed 7.5% of adjusted gross income for 2012.  This threshold is set to increase to 10% starting in 2013 for most individuals. In addition, individuals have to choose to take the itemized tax deduction instead of the standard tax deduction.  Therefore, it may be wise to try to group a majority of medical expenses either in 2012 or 2013, if possible.

3)      Charitable Contributions:

Not only is charitable giving considered a good deed, but it can be tax-deductible as well.  Be sure to obtain a receipt for all cash and non-cash donations provided to eligible charities (i.e., religious institutions, Goodwill, Red Cross, Salvation Army, etc.). Individuals must choose to take the itemized deduction instead of the standard deduction to receive a benefit for federal purposes; however, some state will still provide a deduction even if the standard deduction is taken.

4)      Property Taxes:

If your property tax is due in January 2013, consider the impact of paying the tax early on December 31st in order to deduct the amount on your 2012 taxes, especially if you don’t anticipate being able to itemize deductions on your 2013 tax returns.

5)      Unreimbursed Employee Expenses & Other Miscellaneous Deductions

Consider reviewing the IRS list of miscellaneous deductions for other expenses that you may want to pay in 2012 which could be of benefit on your tax returns.  Examples include: job search expenses, union and other professional dues and subscriptions, unreimbursed travel, tax preparation fees, etc.

6)      Retirement Funding

If possible, consider increasing your contributions to your employer’s 401(k) plan to lower your taxable income.  Also, consider contributing to a traditional IRA to reduce your taxable income.  Note that your IRA account must be setup by the end of the year; however, you have until April 15, 2013 to actually put money into the account to take the deduction on your 2012 tax return.

BONUS TIP!  Note that if the aforementioned expenses are posted on a credit card during 2012 they are tax still tax-deductible for your 2012 tax returns even if paid during 2013.

Simply Taxes, LLC is a local year-round tax preparation firm with an office located in North Raleigh.  Our Raleigh accountants are ready to assist you with your questions pertaining to your taxes!

Related Articles:

What’s New for 2012 Tax Returns (Due in April 2013)?

Which Medical Expenses Can Be Deducted On Tax Returns: Tax Deductible Medical Expenses

Standard Deductions vs. Itemized Deductions:  Which Deduction is Better for Tax Returns?

IRS List of Tax Deductible Expenses: Itemized Miscellaneous Deductions

The information contained within this article is for general guidance only. As such, it should not be used as a substitute for consulting with professional accounting, tax, legal or other competent advisers. 

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