April 15 is the target date for taxes, but to ensure that you pay the Internal Revenue Service the least possible amount on that date, you need to make some tax moves before the tax year ends.
Congress is not making that easy. Once again, U.S. representatives and senators have delayed action on tax extenders, more than 50 business and individual tax breaks that expired on Dec. 31, 2013. Lawmakers are expected to consider, or extend (hence the laws’ collective name) after the Nov. 4 election.
The bad news is that there is no guarantee that all the extenders — including popular things such as the higher education tuition and fees deduction, and itemized claims for state and local sales taxes and private mortgage insurance payments — will be renewed.
Some tax moves will take a little planning. Others are very easy to accomplish. But all are worth checking out to see if they can reduce your tax bill.
Following are 10 year-end tax moves to make before New Year’s Day.
10 tax moves to make now
- Bunch your deductible expenses
- Add to or open an IRA
- Be generous to charities
- Pay college costs early
- Adjust your withholding
- Defer your income
- Add to your 401(k)
- Review your FSA amounts
- Harvest tax losses
- Make the most of your home
1. Defer your income
The top tax rate is 39.6 percent on taxable income of more than $406,750 for single taxpayers; $457,600 for married couples filing joint returns ($228,800 if filing separately); and $432,200 for head-of-household taxpayers. If your remaining pay will push you into the top tax bracket, defer receipt of money where you can.
Ask your boss to hold your bonus until January. Put more money into your tax-deferred workplace retirement plan. Hold off on selling assets that will produce a capital gain. If you’re self-employed, don’t send out invoices for year-end jobs until early 2014.