Equifax

Finance Blog

Last-Minute Ideas for Saving Money on Your Taxes

Written by Eva Rosenberg on December 13, 2011 in Tax  |   No comments

How many times have you read articles about saving money on your taxes at the last minute? Are you bored out of your mind by repeatedly reading about the same things? Well, as it happens, the same things tend to work and make sense for…

saving money on your taxesHow many times have you read articles about saving money on your taxes at the last minute? Are you bored out of your mind by repeatedly reading about the same things?

Well, as it happens, the same things tend to work and make sense for saving money all year. Are there any new ideas I can give you? Let’s see, shall we?

The usual ideas for saving money

Here are the same old—yet still valuable—personal tips for saving money:

  1. Pay your January 2012 mortgage payment in December.
  2. Pay your January 2012 state estimated tax installment in December.
  3. Prepay the second half your property tax bill in December.
  4. Pay outstanding medical bills, especially if your medical expenses are high enough to itemize.
  5. Clean house—gather up all the clutter and donate your books, small appliances, unused furniture, clothing, and so on to charity.

And here are the same old business tips for saving money:

  1. Buy next year’s equipment in December—new computers, copiers, etc.
  2. If your business runs on a cash basis, don’t send out your client invoices until December 31. They won’t have time to pay you in 2011.

Some slightly new ideas for saving money

  1. Use credit cards to pay your business bills in 2011. You get the deduction now, but you don’t have tap into your accounts to pay until the credit card statements arrive in 2012.
  2. Find out from your various vendors (personal and business), if you can get a discount by paying early or by using a check or cash. For instance, the Jewish Home for the Aging gives residents a 1 percent discount if they pay in full by the 15th of the month without using a credit card. That’s worth several hundred dollars a year.
  3. If you can still submit a change to your payroll department, increase your 401(k) or retirement plan contributions as much as you possibly can in December. You can drop them down again in January. Depending on your tax bracket, you might not only reduce your taxable income but you may also qualify for a retirement savers credit, which is worth up to $1,000 (or $2,000 per couple).
  4. If you know you’re going to owe taxes, consider increasing your withholding in December by filing a Form W-4 with your payroll department. If you apply most of your last couple of paychecks to the IRS and/or to state withholding, you will avoid all the late payment penalties. In January, you can make your withholding zero to make up for the extra withholding December—and balance out your cash flow. This can save you several hundred dollars if you are way behind in estimated tax payments due to business profits or investment income.

Bonus tip for seniors

Folks age 70 ½ or older may have up to $100,000 in distributions from an IRA account donated directly to charity. You won’t get a charitable contribution deduction, but you also won’t pay any taxes. Instead, these distributions satisfy your annual required minimum distribution (RMD). You may have taken advantage of this in January, to use towards your 2010 RMD. You get to do it again, now, for 2011.

If you’re tithing, or making substantial monetary contributions, this may be a good way to make donations. Another advantage is that you won’t be adding your RMD to your income. So, perhaps less of your Social Security income will be taxable this year.

READ MORE:
Making Sure You Get the Adoption Tax Credit
Filing Taxes: Seven Reasons to Adjust Your Withholding
Paying Taxes: How Is Your Vice Taxed?
Saving Money: Could You Benefit from the Savers Tax Credit?
Tax Tips and Tax Consequences of Failed Businesses

Eva Rosenberg, EA is the publisher of TaxMama.com , where your tax questions are answered. Eva is the author of several books and ebooks, including the new edition of Small Business Taxes Made Easy. Eva teaches a tax pro course at IRSExams.com and tax courses you might enjoy at http://www.cpelink.com/teamtaxmama.

No comments yet


Leave a Comment


Name :


Commenting guidelines

We welcome your interest and participation on this forum, but be aware that comments will be published at Equifax's sole discretion. Please don't use this blog to submit questions or concerns about your Equifax credit report or raise customer service issues. Instead, you should contact Equifax directly for all such matters and any attempts to do so in this forum will be promptly re-directed.

Some other factors to consider when commenting:
  1. Registration and privacy. While no registration is required to visit our forum, participants wishing to post a message must register by creating an account. All personal information provided by forum members incident to registration is governed by our Terms of Use and Privacy Policy.
  2. All comments are anonymous. We'll delete your name, e-mail address, and any other identifying information, including details about your investments.
  3. We can't post or respond to every comment - As much as we'd like to, we can't post every comment, nor can we guarantee that we will respond to each individual message. All questions or comments about your Equifax credit report or similar customer service issues should be handled by contacting Equifax directly.
  4. Don't offer specific legal, tax or financial advice. All of the materials on this Site are for information, education, and noncommercial purposes only and this forum is not intended as a means of expressing views or ideas regarding any specific legal, tax, or investment advice. While offering general rules of thumb is both permitted and encouraged, recommending specific ideas or strategies regarding investments, taxes, and related matters is prohibited.
  5. Credit Repair. This blog is not intended as a venue for the discussion or exchange of ideas regarding credit repair or other strategies intended to assist visitors and community members improve or otherwise modify their credit histories, ratings or scores.
  6. Stay on topic. Your comment should be concise and pertain to the specific post in question.
  7. Be respectful of the community. The use of profanity, offensive language, spam, and personal attacks will not be tolerated and egregious or repeat offenders will be banned from future participation. We encourage disagreement and healthy debate, but please refrain from personal attacks on our WordPresss and contributors.
  8. Finally: Participation in this forum may be terminated by Equifax immediately and without notice for failure to comply with any guidelines or Terms of Use. As such, you should familiarize yourself with all pertinent requirements prior to submitting any response through the blog or otherwise. All opinions expressed in this forum are solely those of the individual submitting the comment, and don't necessarily represent the views of Equifax or its management.

Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.


Tax Archive

Stay Informed Sign up for our FREE Equifax email Newsletter