Even though the tax year is over, you still have opportunities to reduce your 2013 taxes. Many strategies for tax planning need to be done by December 31st; however, there are others that you can still take advantage of before you file your taxes. The best thing you can do is do not leave any viable deductions on the table.
Maximize Contributions To Your IRA
Self-employed individuals and small business owners have until April 15th to contribute to their SEP IRA for the prior year. The limits are the lesser of 25% or $51,000 in 2013. If you get an extension, you will have until October 15th to fund your SEP IRA for the 2013 tax year. The SEP IRA is much more flexible than a Roth IRA or a regular IRA because it gives you an opportunity to make a contribution when you receive higher profits later in the year.
The New Deduction For A Home Office
If you did not keep good records of your home office expenses in 2013, you do not have to scramble around looking for them with the new simple home office deduction. This deduction lets you take a $5.00 deduction per sq. ft. for the place in your home that you use for work. Many people do not claim any deductions for their home office because they feel it will trigger an audit. With the new standard home office deduction, anyone who uses a home office should claim it this year.
Look For Miscellaneous Tax Credits
Take time to go through your receipts to see if you have anything that qualifies for tax credits. Tax credits reduce your tax liability dollar for dollar. See if you bought anything that qualifies for the energy efficient tax credit. You will find a list on the IRS website of all eligible Energy Star appliances and electric and hybrid vehicles that qualify for a credit up to $7,500.
If you have children in college or are in college yourself, you could offset some of the expenses using the LLC (Lifetime Learning Credit) or the AOTC (American Opportunity Tax Credit).
Before you start preparing your tax return, make sure you organize all of your documents and receipts. This will help you identify any deductions you might not have thought of and will make sure your tax return is accurate.
Organizing your tax records and financial documents now will make the process of filing your taxes easier. Take a little time each day to go over your bank statements, credit card bills and charitable contributions you made in 2013 to make sure that nothing is overlooked.
Keep all of the 1099s and W-2s you receive in one secure location so they do not get misplaced forcing you to file a late tax return or an incomplete tax return
There is a lot you can still do between now and when taxes are due on April 15th to lower your tax liability. You can cut your taxes considerably by claiming all of the tax credits you are eligible for and making all prior year contributions.