Fat Dollar Money Saving Tip - Income Taxes(Originally published in Dec 2011)
Last Minute Ideas for Lowering Your Income Taxes
Use these last few days of 2011 to plan ahead for lower income taxes:
1. Get your paperwork organized now. Instead of having one frantic evening of gathering your tax papers for your return preparation, get started now. Get a box or folder, and start filling it with all the 2011 tax papers, receipts, and documents. While you are at it, get another folder and label it "2012" and get the New Year off to a good tax document start.
2. Do a rough estimate of your income taxes. If you may owe taxes, you still have time to make donations, contribute to a regular IRA account, fund a Health Savings account, or any number of last minute moves to reduce your taxable income.
3. If you normally itemize deductions and want to increase your deductions in 2011, then clean out the closets and under the bed and give away all those unused items, pay your last State estimated tax payment, pay medical bills (if your medical expenses will exceed 7.5% of adjusted gross income- otherwise wait until 2012 to pay medical bills)
4. Consider qualified energy saving improvements, such as extra insulation or perhaps a new storm door or storm window. The purchased item must be actually installed and used by Dec 31 to take the credit in 2011.
5. If you have not already paid the maximum allowable for the Educational Tax Credits, then consider paying any college tuition and books invoices in 2011.
6. After you have done a rough estimate of your income taxes (see #2 above) then consider changing the withholding on your paycheck if the estimate shows a large refund or a large balance due.
7. Contribute to your Regular or SIMPLE IRA account.
8. Contribute to your Health Savings Account.
9. Check for special state tax breaks, such as a donation to a state college (Indiana).
10. If you normally have your return prepared professionally, then make an appointment now so that you get a better chance at having the appointment at your convenience.
Paying your fair and legal share of taxes, taking advantage of all the deductions and credits allowable, neither underpaying nor overpaying - that's The Fat Dollar way.
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