submitted by Martin H. Abo, CPA/ABV/CVA/CFF, Abo and Company, LLC
As we approach year-end, it’s again time to focus on last-minute moves you can make to save taxes – both on your 2013 return and in future years. To get you started, we’ve included a few money-saving ideas here that you may want to put in action before the end of the year.
For 2013, the standard deduction is $12,200 for married taxpayers filing joint returns. For single taxpayers, the amount is $6,100. Currently, it looks like these amounts will be about the same for 2014.
If your total itemized deductions each year is normally close to these amounts, you may be able to leverage the benefit of your deductions by bunching deductions in every other year. This allows you to time your itemized deductions so they are high in one year and low in the next.
For instance, if you’re temporarily short on cash, charge Tax (AMT – Alternative Minimum Tax), as these taxes are not deductible for AMT purposes.
Higher-income individuals will likely see their taxes go up this year. This makes it more important than ever to do the calculations to see where you stand before the end of the year.
If it looks like you are going to owe income taxes for 2013, consider bumping up the federal income taxes withheld from your paychecks now through the end of the year. When you file your return, you will still have to pay any taxes due less the amount paid in.
However, as long as your total tax payments (estimated payments plus withholdings) equal at least 90% of your 2013 liability or, if smaller, 100% of your 2012 liability (110% if your 2012 adjusted gross income exceeded $150,000; $75,000 for married individuals who filed separate returns), penalties will be minimized, if not eliminated.
Finally, watch out for the AMT in all of your planning. What may be a great move for regular tax purposes may create or increase an AMT problem.