You should ideally tend to your tax matters throughout the year, but even if you haven't been doing so, it's not too late to start. Here are some year-end tax tips.
- Contribute appreciated stock, not cash, to your favorite charities. If you've held the shares for more than a year, you'll avoid paying tax on the appreciation, and you'll still be able to deduct the full value of the stock. Call your favorite non-profit, and the folks there will probably be able to help you with this. (Learn about our own brand of charitable giving, Foolanthropy.)
- Review your capital gains and losses. If you're looking at substantial capital gains on which you'll be taxed in the coming year, you might be able to sell some stock for a loss, to offset some of the gain.
- If you believe that your tax bracket next year will be no higher than this year, you're itemizing your deductions, and you won't be bothered by any alternative minimum tax issues, consider making your state and/or local tax payments before the end of this year. You're going to owe the money anyway, so if you pay now, you can take the federal tax deduction this year.
- See whether your employer-sponsored retirement plan permits you to make "catch-up" contributions at the end of the year if your contribution level to date is less than the maximum allowed.
- Don't overlook valuable credits that might be available to you. If you pay someone to care for your child who's younger than 13 so that you can work, you might be eligible for the Child and Dependent Care Credit. The Child Tax Credit can save you $1,000 per qualifying child younger than 17. The Hope Credit offers savings of $1,500 per student for qualified tuition and fees paid by or for the student. The Lifetime Learning Credit offers up to $1,000. If you've recently adopted a child, you may be able to enjoy a credit of more than $10,000.
And if you'd like an actual person (a financial pro, no less) to talk to about your tax concerns and your financial planning needs, look into our TMF Money Advisor service. It features customized independent advice from a variety of objective financial experts. You owe it to yourself to at lest look over this offering and perhaps take a free test drive.
Fools, now is the time to open your hearts and wallets to worthy causes! Please support our five Foolish charities at www.foolanthropy.com.