No one likes to think about the middle of April when the tax deadline comes due. However by December 31 every year it is too late to try and change anything to reduce the amount of taxes that will appear on your tax bill. This is why you should take advantage of the last few months of the year and try your best to reduce your tax liability. The best thing you can do as a taxpayer is to be prepared for the end of the year tax planning. You can best be prepared by following some of the tips in the article.
Follow The Same Strategy As Last Year
If you believe that your tax bill and the amount of deductions you have will be the same amount as last year you can postpone the receipt of taxable income until next year and accelerate your allowable deductions that will be claimed. Of course this can only happen if you know that you will be in the same tax bracket for both years.
If for some reason you think that an increase in your income will put you into a higher tax bracket you should do just the opposite. This way you will stay in the same tax bracket as the year before.
Itemize Your Deductions
If you are thinking of itemizing your tax return you will need to be sure that your allowable deduction will exceed the standard amount of deductions compared to the status of how you are filing.
If when you are completing your tax returns you show that you do not have enough items to itemize you are able to put off these deductions until the next year. By having them deferred into the next year it might be possible that you will give yourself tax savings.
When you are considering using medical expenses, job related and investment expenses as deductions the timing of these expenses will come into play when doing your tax return. You will find that there is a certain dollar amount that you will be able to claim and needs to be within a certain time frame in the year.
Energy Tax Incentives
In the year 2005 there was a new act passed that allows for tax credits for certain automobiles as well as home improvements such as windows. The expense of these items can come as a welcome tax deduction. You also have the option of postponing these deductions until the next year if needed.
When completing your tax returns you will find that it can be a very time consuming and confusing process. Many people will feel overwhelmed by the entire process. There are many different professionals that can be hired to help you with this task. If you are trying to complete it yourself and you run across problems you can always call then and consult the professionals. Tax time can be a time of many questions. It is better to ask when you are unsure what to do but being prepared is always your best place to start.