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Tax Planning Strategies
To my friends, family and clients:
As we near the end of the 2012 tax year, I want to provide you with some planning strategies you may find helpful in lowering your tax liability.........
Contribute Max to Retirement Plans
- 401k’s up to $17,000 (+ $5,500 catch-up if over 50 years old)
- Traditional IRA’s up to $5,000 (+ $1,000 catch-up if over 50 years old)
Prepay Property Taxes
- Pay February, 2013 property tax installment by December, 2012
Prepay Mortgage Payments
- Pay January, 2013 mortgage payment by December, 2012
Make Charitable Donations
- If you “tithe” on income as earned, prepay your 2013 tithes by December, 2012
- Donate appreciated stocks held more than one year (can deduct full market value & pay no capital gains tax…versus first selling stock then donating proceeds)
Sell Loser Stocks
- Sell stocks that are currently worth less than you paid for them
- Nets against other capital gains + can take $3,000 net capital loss
Turn Your Hobby into a Business
- Losses reduce other taxable income with very few limitations
Maximize Health Savings Account Contributions
- Account earnings are tax free & contributions reduce taxable income
- $3,100 max for individual plans…$6,250 max for family plans
(+ $1,000 catch-up if over 55)
- Any points paid on a previous refinance will be fully deductible in tax year of new refinance
- Additional income is taxed at your top tier percentage.
- Conversely, any deductions from income save taxes at your top tier percentage.
- Reducing taxable income not only saves taxes at the top tier percentage, it may also help you avoid phasing out of tax deductions & credits (includes child tax credit, student loan interest deduction, education credits, etc.)
** Each situation should be analyzed individually. Alternative Minimum Tax rules may negate the impact of the strategies mentioned below. Most strategies mentioned help those who itemize deductions.
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