Hear those holiday bells? Soon they’ll be ringing in the new year. But before the clock strikes 2013, you have opportunities to reduce your 2012 federal income tax bill.
Here’s a grab-bag of suggestions to consider. In considering these potential savings for 2012, consider the currently scheduled end of the Bush tax cuts and how they will impact you.
We can help. If you have any questions or comments, please call Jack Craven at 212-605-0276 or email: jfcraven@MediaCPAs.com.
Jack Craven, CPA
1. Plan for the AMT. The annual exemption may change, but the usual triggers – items that can create alternative minimum tax liability such as certain large deductions – are the same.
2. Education incentives. Pre-paying qualifying expenses for the first semester of 2013 can get you a larger credit or deduction this year.
3. Family gifts. Take advantage of the expiring $5.12 million lifetime gift exclusion by sharing the wealth – and the tax burden – with lower-bracket family members.
4. Deferred plans. Maximize contributions to retirement plans such as your 401(k) or IRA, and fund other tax-favored accounts, such as health savings accounts.
5. Charitable contributions. Gifts to qualified charities made on your credit card by December 31 qualify for a deduction this year, even though you’ll receive the credit card statement in January.
6. Itemized vs. standard deduction. Shift expenses such as property taxes between years to “bunch” deductions and get the most tax benefit.
7. Disaster relief. Check for a potential refund, and consider amending your 2011 return to claim your loss if you live in a federally declared disaster area.
8. Investment cost basis. Understand your cost basis choices before capturing capital gains or losses, especially when selling mutual funds.
9. Temporary depreciation deductions. Assets purchased for your business or rental property before year-end may qualify for accelerated depreciation methods that are scheduled to expire on December 31.
10. Kiddie tax. Instead of transferring assets to your children to save for future education expenses, consider contributing to a 529 plan, which can limit exposure to “kiddie tax” on unearned income.
Contact us to discuss these and other tax-saving and planning ideas suited to your particular situation.
IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with Treasury Department regulations, we inform you that any U.S. federal tax advice contained in this correspondence (including any attachments) is not intended or written to be used, and cannot be used for the purpose of (i) avoiding penalties that may be imposed under the U.S. Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.