Year-End Tax Planning Tips

Last updated on August 26, 2024

The end of the year, preferably before the holidays, is the best time to review your financial and tax planning for the year, and make any corrections necessary.  If you want to make investments or take advantage of the tax credits and deductions for 2014, then you must do so now to lower your tax bill.

Most taxpayers choose to make contributions to a tax-advantaged saving plan such as a 401(k) or an IRA to save for retirement and reduce their taxes. To make your contribution count for your 2014 taxes, they must be made before January 1, 2015. Apart from a retirement plan, you can also make tax-advantaged contributions to a Health Savings Account (HSA) or the Simplified Employee Pension plan (SEP).

Before the end of the year, you should verify that your withholdings are correct. If you are paying too little or too much in withholdings then you may want to make the correct adjustments.

Gifts and charitable contributions can also bring down your tax bill. As an individual taxpayer, you can gift up to $14,000 a year to any number of people. If you file jointly, the upper limit expands to $28,000.

Making charitable contributions to qualified charities is another method of saving taxes. When you do make a contribution, make sure that you get the receipt from the charity with its name, amount of the contribution, and the date on which the contribution was made. Remember that you can only make a deduction if the contribution was made to a qualified charity.