This is a good time to clean out those closets and get a tax deduction at the same time. Remember to get a receipt from the organization that received your gift. It is also a good idea to take a picture of the items you gave or write a detailed list to attach to the receipt. The IRS is looking more closely at these numbers than in the past.
Donating a used vehicle before the end of the year may clear out an extra space in the garage. The Internet has different websites that will help you with the valuation. Making January’s cash contributions in December will give you the deduction this year.
Estimated Tax Payments
If you have made any major changes in your life during the past year, you may want to meet with your tax professional before the end of the year to make sure you have not grossly overpaid or underpaid your estimated taxes. The fourth quarter payment is due January 15, 2015, so you still have time to make adjustments.
Real Estate Taxes
If your real estate tax bills are based on a calendar year, you may get the bill just before the Christmas holidays, giving you the opportunity to control which year to make the payment. If your expenses are large enough in one year to cause you to itemize, you may want to pay the property tax bill in that year so that you get the most benefit.
If you’ve purchased a home during the current year, the property tax paid is shared between the owners. Additional calculations may be required.
A pending sale of property may be expedited or delayed based on the tax benefits. Before you close out a sale, you should consult with your tax professional prior to the sale. You may also want to consider an installment sale. Generally, the gain reported each year would be dependent upon the money received during that year.
Buying Business Property
A business owner or an employee who purchases depreciable equipment (including a vehicle) may want to consider the purchase before the end of the year. You have the choice of expensing the property or depreciating it. The depreciation on the property is based on the tax life of the property.
Call your tax professional to get the latest information.
The Internal Revenue Code contains several educational incentives such as the Hope Credit and the Lifetime Learning Credit.
Cafeteria Plans and Salary Deferrals
If you want to set up or change your contributions or deferrals into your employer’s cafeteria plans or retirement plans, you probably have to let the employer know within the next month or two (before the end of December or maybe earlier). Your tax professional can help with some of these decisions. Don’t wait until your tax preparation appointment for these; it may be too late.