The end of the tax year is quickly approaching, and now is the time to start thinking about tax saving ideas. Here are five last-minute strategies you can use to save on your taxes before the deadline. These strategies will not only help you save money this year, but will also set you up for success in future years.
Make a Late-Year Charitable Donation
Making a charitable donation is one of the most efficient and rewarding ways to save on taxes. Not only will your donation be tax deductible, it will also benefit a worthy cause that is important to you. When donating, be sure to get a receipt so that it can be properly documented on your taxes.
Make Contributions to Your Retirement Plan & Take Any Required Minimum Distributions from Your Retirement Accounts
Contributing money towards retirement is one of the best ways to save on taxes because contributions are pre-tax deductions. Additionally, if you're over age 70 1/2, you may need to take required minimum distributions (RMDs) from your retirement accounts which can help lower your overall taxable income. Make sure that these distributions are taken prior to December 31st so that they can be accounted for during this tax year.
Take Any Final Investment Gains and Losses
If you have any investments with gains or losses this year, make sure those are taken prior to December 31st as well. Taking losses at the end of the year can significantly reduce your taxable income while taking gains can help lower capital gains rates.
Gather Up Non-Cash Items for Donation
Donating non-cash items such as furniture or clothing can also provide an opportunity for tax savings at the end of the year. Be sure that any non-cash items donated receive proper documentation such as a receipt or canceled check so that it does not go unrecognized when filing taxes.
Consider Making Any Final Gifts to Dependents
Finally, gifts made directly from individuals or estates to dependents during this calendar year could qualify for certain deductions or exemptions depending on where they live and how much money was gifted. Make sure all gifts are documented in order for them to be recognized when filing taxes next year!
With just days left until 2022 comes to close, now's the time act fast if you want to take advantage of these last minute tax saving tips! Don't forget—all donations must be made by December 31st in order for them to count towards this tax year and should come with proper documentation in order avoid any issues when filing next April 15th! Taking these steps now could mean big savings down the line!