Money Matters: Experts talk tips for year-end tax planning
Several tax experts provide some money-saving tax tips to consider before 2013. Shazia Khan has more.
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With 2013 upon us, it's the season for end-of-year tax planning, but this time around, it's not as straightforward.
"A great deal of this discussion, this fiscal cliff discussion, is related to next year, but a great deal of it is related to this year, to the 2012 tax return year," says Mark Stever of Jackson Hewitt Tax Service. "So as they're watching the fiscal cliff discussion unfold on television, they need to keep in mind that it will affect them today on this year's tax return."
So given a deal has yet to be reached, there are still some end-of-the-year tax moves to make, regardless of the fiscal cliff outcome.
One is to beef up your 401K plan to lower your taxable income.
"Always take full advantage of the retirement contribution tax benefits and if your employer has a matching, you should at least meet that standard," Stever says.
Anticipating a medical or dental procedure next year? You may want to pay for it or other unpaid health bills, either with cash, check or credit card before year's end.
"This year, of course, the medical deductions are allowable to the extent they exceed 7.5 percent of your income," says Jay Safier, a CPA. "Next year, the rules change. The 7.5 percent rule continues if you are 65 and older. However, if you are under 65, the 7.5 goes up to 10 percent."
Also, make sure to use, or lose, any tax-free money in your flexible spending account.
If you're feeling charitable, it's better to open your heart and wallet before the ball drops. Depending on the cash or goods donation, you can write it off on your 2012 return.
Finally, now is a good time to go through that "shoebox" or build one with receipts and other tax-related documents so you're better prepared for tax season.