LaShonda Debrew | CPA Upper Marlboro Maryland CPA LaShonda DeBrew
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9 Killer Tax Saving Tips for the End of the Year: Part 1

by La'Shonda DeBrew on November 5, 2014

Are you a procrastinator when it comes to tax planning? Don’t fret, even the most organized people tend to put off properly planning for that inevitable yearly tax bill. But trust me, it rarely pays to put off such an important task.

Remember most tax-smart strategies take time to implement and come with a strict December 31st deadline, so an early start can save you stress and most importantly save you MONEY! Shouldn’t you be enjoying the holidays rather than scrambling to meet a tax deadline?

Here are the first 3 for you to implement NOW!

  1. Adjust your withholding.
  2. Contribute to a tax-advantaged savings plan.
  3. Contribute to charity.

1. Adjust your withholding.

It is ideal that the amount of money taken from your regular paycheck or sent to the IRS as quarterly payments (for business owners) should be close to your actual tax liability. If too little is withheld you could have a big tax bill when you file your taxes. On the other side, if you withhold too much you are basically giving the IRS a tax-free loan (ouch!)

But don’t worry, there’s still time to make adjustments to your withholding for the year by making changes to the W-4 you have on file with your employer. If you’re a business and  make quarterly payments, you will want to make adjustments to your last quarterly payment due in January 2015.  Beware however, that the longer you wait, the fewer regular pay periods you’ll have to reach your targeted amount. So do this one sooner than later.

2. Contribute to a tax-advantaged savings plan.

Make the smart move and be sure to contribute to a 401(k) or an IRA, you won’t regret it. This one has two highly beneficial outcomes: it reduces your taxable income allowing any earnings to grow on a tax-deferred basis, it also helps get you meet your retirement goals you have set, but the deadline is 12/31/14 for contributions to your 401(k), 403(b), or similar workplace retirement plan, so you need to act quickly.

401(k) contribution limit is $17,500 ($23,000 for people age 50 or older). Due by 12/31/14

IRA contribution limit up to $5,500 ($6,500 if you’re age 50 or older). You have a bit more time for this one: 04/15/15

3. Contribute to charity.

This one is a tried-and-true tax savings strategy that you are no doubt familiar with. If you itemize your deductions (versus just taking the flat standard deduction) you will want to make several charitable deductions very soon. So pick a charity or non-profit organization and go donate! Just be sure they give you a receipt for each donation, not just for those over $250.

Stay tuned for the next set of tax saving tasks you MUST do before the end of 2014…

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