Tuesday, November 21, 2017
Business

Last-minute tax moves

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Here are moves that could lower your tax bill and steps to take so you don't get in trouble with the IRS:

Þ Fund a traditional IRA: If you contribute by today, you might be able to get a full or partial deduction. If you're under age 50, you may contribute up to $5,000 to a traditional or Roth IRA. Those 50 and older may contribute up to $6,000.

With a Roth IRA, you won't be able to deduct your contribution. You reap the benefits of a Roth when you withdraw the money tax-free at retirement.

Þ Contribute to a health savings account: You have through today to make deductible contributions of up to $3,100 for individuals and $6,250 per family. But the HSA has to be linked to an approved high-deductible health insurance plan.

Þ Teachers, claim your fair share: The fiscal cliff deal extended for 2012 and 2013 the educator expense deduction of $250 for out-of-pocket money spent on classroom supplies, materials, books and software.

Þ Don't overlook benefits for the self-employed: If you're self-employed, you may deduct the full amount of health insurance premiums for you, your spouse and your dependents.

Þ Deduct state and local sales taxes: Taxpayers have the option of deducting their state and local sales taxes instead of state and local income taxes.

To claim this tax break, you must itemize deductions. If you didn't save all your receipts, you can still claim the deduction by using the general sales tax tables provided by the IRS in the "Instructions for Schedule A" (Form 1040).

Þ Don't inflate the value of charitable donations: "The IRS expects people donating items to qualified charitable organizations to use fair market value in determining what each item is worth," said CCH, which publishes tax information for tax professionals.

For noncash donations of more than $500, you must get a written description of the donated item. Noncash donations of more than $5,000 must be appraised.

"Additionally, cash donations of any amount require proof, such as a canceled check, credit card statement or receipt from the charity," CCH experts said. "Contributions of $250 or more also require a letter from the organization specifying the name of the donor, the amount given and the date received."

Þ File for an extension, if you need the extra time: It's better to do things correctly than to risk filing a return with mistakes.

Filing an extension by using IRS Form 4868 will give you until Oct. 15 to submit the return. Remember, an extension of time to file is not an extension of time to pay, so you still have to pay taxes owed by April 15.

Þ Verify information on your return: Make sure your math is correct and that you have entered the correct data and Social Security numbers. Tax-filing software may catch and prevent many errors, but even the best tax software won't help you if you enter bad data.

Pamela Yip, Dallas Morning News

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