Right about now, you’re preoccupied with holiday parties, gift wrapping, Secret Santas, and where you’re going to spend your Christmas break, if you get one.
The last thing you want to think about is taxes.
So let’s make this as painless as possible. Here is a checklist of things to do this week. Get all of this out of the way now, and enjoy your holiday season.
First, do a quick estimate to see if you’re going to owe taxes next year. You can use TurboTax’s TaxCaster or H&R Block’s Tax Estimator.
If you’re going to owe money next April, here are some things you can do to beef up your deductions:
- You paid the first installment of your property taxes earlier this month. Pay the next installment before December 31.
- Around December 28–31, pay your January mortgage payment. By then, you will have accrued nearly a whole month’s interest. You’ll be able to claim the deduction in 2010.
- Clean out your closets and attics. Make a complete list of the good, usable things you find and no longer need and donate these books, toys, electronics, pieces of furniture, etc., to your favorite charity. See my blog earlier this month for specifics.
- If you can afford it, increase your retirement plan contributions. That will reduce your taxable wages for this year.
This won’t help me at all, you say?
If you don’t itemize because you don’t have a mortgage or deductible expenses, what can you do?
You can use credits. See if you still have time to score some of these energy credits or child-friendly credits.
You may qualify for an IRA deduction. And if you do, the good news is you can wait until April 18 to fund it.
Generating Cash To Increase Your Savings
If you can’t find many tax-cutting options that will work for you, here are some reliable ways to generate cash instead.
Folks involved with outside sales and employee business expenses can do a better, faster job of preparing your expense reports. The sooner you turn them in, the faster you get your money. The more complete your report is, the more of your expenditures you get back. Let’s face it: you’re leaving money on the table because you didn’t track all your receipts, right? Everyone does. (Sigh.)
When it comes to savings, start setting some money aside now, even with the holidays coming, to cover next year’s taxes.
Can’t save? Establish lines of credit right now. They’ll be live and ready to use by April, when you will need to pay your balance due.
Of course, you could always start a quickie Internet business and become a millionaire by April—at least in your dreams.
