The Internal Revenue Service today reminded taxpayers they have three weeks left to make some final tax moves for the 2013 tax year.
"There are many opportunities for taxpayers to legitimately reduce taxes or increase refunds as the year winds down," said IRS spokesman Raphael Tulino “Many may find some tax planning done now will save time, and money, later.”
These are the top eight points to consider:
- Make Charitable Contributions. Make 2013 deductible charitable contributions on or before Dec. 31. Give to a qualified public charity and keep a paper trail. Clothing and household items must generally be in good used condition or better to be deductible. Donations charged to a credit card by Dec. 31 are deductible for 2013 even if paid in 2014. Taxpayers must be itemizing deductions on IRS Schedule A in order to benefit.
- Winterize Now, Save on Taxes Later. Homeowners still have some time to make energy saving home improvements.The Nonbusiness Energy Property Credit is to homeowners installing energy efficient improvements such as insulation, new windows or furnaces. The 2013 credit rate is 10 percent of the cost of qualified energy efficiency improvements and has a lifetime limit of $500. The Residential Energy Efficient Property Credit is for alternative energy equipment. It equals 30 percent of the amount spent on qualifying property such as solar electric systems or solar hot water heaters.
- Check Investments and Consider a Portfolio Adjustment.Taxpayers can deduct capital losses up to the amount of capital gains plus $3,000.
- Contribute to a Retirement Account. The maximum 2013 IRA contribution is $5,500 ($6,500 if age 50 or over). The maximum contribution for a retirement plan such as a 401(k) is $17,500. ($23,000 if age 50 or older) Eligible taxpayers can also deduct IRA contributions.
- Get Credit for Retirement from the Retirement Savings Contribution Credit or “Saver’s Credit.” This under-the-radar tax credit may be worth up to $2,000. It is available to eligible taxpayers who contribute to a retirement plan and whose income is generally less than $59,000.
- Consider a Qualified Charitable Distribution. This allows individuals age 70½ or over to contribute up to $100,000 directly to a qualified charity and exclude it from income. The excluded amount can also satisfy any required minimum distributions the individual must otherwise receive from their IRAs in 2013.
- Gift Giving. Taxpayers can give a gift worth as much as $14,000 in cash or property in 2013 to another person without having to file a gift tax return. Gifts to individuals are not deductible.
- Save Receipts and Paperwork. Accurate record-keeping provides a good reminder at tax time.