There is another list you should be checking in addition to your holiday shopping list. But this list will enable you to save money rather than spend it, so let’s definitely get excited about attacking the end of the year tax to-do list.
1.) Make an extra mortgage payment
Go ahead and pay your January 1st mortgage payment in December and you will get an additional deduction for the interest paid. Make sure you get the payment in in plenty of time for it to arrive at your lender by year’s end. That way, the added interest will show up on the annual statement you will get from your lender in late January detailing your deductible mortgage activity.
2.) Charitable giving
Charities are most in need of donations by the end of the year and these contributions can help you ease your tax bill. Keep all records of cash donations especially if the total is $250.00 or more.
3.) Job hunt deductions
Did you look for a job this year? If so, you can deduct travel expenses, continuing education expenses and resume prep. Even those copies made at Kinkos can be deducted if you keep the receipt.
4.) IRA contributions
If you have an IRA separate from your 401K, you have until April 15th of the upcoming year to contribute to your retirement savings and still make it count towards your taxes.
5.) Be aware of medical expenses
If expenses for medical care are close to the 7.5 percent of your adjusted gross income needed to declare them as a tax deduction, go ahead and schedule a procedure or appointment that you need anyway before the end of the year.
6.) American Opportunity Tax Credit
Take advantage of furthering your education. This credit expanded the existing Hope Credit, and is a tax break for education that allows you to claim a credit of up to $2,500 of the cost of
qualified tuition and related expenses, and up to $1,000 of the credit could come back to the taxpayer as a refund. The credit has been extended through 2012, but will also expire in 2012. It may be beneficial to pay 2013 tuition in 2012 to take full advantage of the credit.7.) Hire a registered tax professional
Choose your tax preparer wisely. The IRS is continuing its efforts to regulate tax preparers, and ramping up its efforts to hold tax preparers accountable by weeding out unscrupulous ones to include fingerprinting and competency exams. There is also a registration process and issuance of a personal preparer tax
identification number or PTIN to each. When hiring a tax professional, ask about his or her IRS registration status in addition to questions targeting competency and ability to fulfill your tax prep needs.8.) Stay apprised of changes.
Find out about tax law changes, helpful hints and IRS announcements during the year by subscribing to IRS Tax Tips through www.IRS.gov or IRS2go (the mobile app). The IRS issues tips regularly during summer and tax season.
Black Enterprise contributor Jennifer Streaks is a Finance Expert, Author & Pundit. Continue the conversation by following her on twitter @JStreaks or on her website at www.JenniferStreaks.com