The earlier the better when it comes to adopting a strategy to reduce your taxes. But even if time is short, there are some last-minute tax cutters you might consider:
If your income is high, postpone receipt of more income. For example, if you’re due a bonus, see if your employer will hold off writing the check until January. If you own a cash-basis business, send your December billings at the end of the year.
Close to the line on itemizing? Accelerate payment of deductible expenses such as state income or property taxes if your tax payments for the year don’t already reach the $10,000 SALT cap. Make an extra mortgage payment for more deductible interest.
One of the best ways to reduce taxable income is with tax-beneficial retirement programs. Contribute the maximum to a deductible IRA, 401(k) or Keogh plan.
Take advantage of all available tax credits: Child Tax Credit, Dependent Care Credit, Premium Tax Credit, Adoption Credit, Elderly and Disabled Credit and Educational Credits. Be aware that the child and dependent care credits are lower this year. This is also the first year in the last two with no pandemic-related payments.
You can make cash contributions or charge them on your credit card and take a current deduction. If you donate appreciated property, you’ll get to deduct the full market value.
When you are ready, please call to discuss your situation and to set up a personalized tax plan.
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