Tax is our Biggest Personal Expense, whether its sales taxes, gasoline taxes, income taxes….. the list goes on. Having the right tax information is absolutely key, and no time more important than at the end to the year.
Here’s an End of the Year Checklist for the For Employed, Self Employed & Investors:
1. Sell losers in your portfolio, particularly if you have Capital Gains to offset within the last 3 years.
2. Consider doing a Debt Swap if you are paying any interest at all that is not deductible for Tax purposes. You won’t increase your Debt but you will make the interest payments deductible.
3. If you are making a donation, donate securities that have gone up in value instead. If you sell them first, you pay a capital gain and donate the same amount of money. If you donate the shares, you pay no taxes nor does the Charity pay any taxes.
1. If you haven’t got any self employed income you really should be thinking about it because it is the Last Great Tax-Shelter out there.
2. You can deduct things that you are paying for anyway – your car, computer costs, part of utilities at home, mortgage and taxes etc.
3. If you want to reduce your income, consider paying family members before the end of the year. By doing this you are really shifting income that would otherwise be taxed in your hands to a family member who may pay no taxes at all.
4. If you were going to buy any Capital Assets in January/13, better to buy them now in December/12 so that you can depreciate them in 2012. Otherwise you won’t be able to depreciate them until next year.
5. If you are selling Capital Assets, wait until January 2013 so that you can get another year of depreciation.
1. If you can get your employer to go along – Hire your spouse or child as an assistant, you can deduct their assistants income right from your employment income.
2. Talk to your employer about paying for non-taxable benefits for you like courses, gifts, awards etc.
3. See if your employer can lend you money instead of a Bank. Your employer can lend you money for as little as 1% and there is no taxable benefit to you.