Your brain may be flooded with holiday to-do lists this December.
But there’s another checklist you should run through now that could affect your financial situation next year.
Let’s walk through some things you can do by Dec. 31 that could lessen your tax burden and/or increase your tax refund for 2017.
PAY PROPERTY TAXES EARLY
As Congress hashes out changes to U.S. tax code, puzzled taxpayers can rest assured that most of the changes won’t go into effect until the 2018 or 2019 tax years.
But we do know that property tax deductions will be going away next year, so Amy Peek, accountant and owner of Pittsburgh-based Peekz ConsultiN, recommends paying both your 2017 and 2018 property taxes by Dec. 31.
You will be able to deduct both payments on your 2017 tax return — your last chance for the foreseeable future to take advantage of the deduction.
UPDATE YOUR CONTRIBUTIONS
Employee-sponsored health insurance plans often are up for enrollment in December, so don’t forget to sign up for or renew plans for 2018.
But don’t stop there. This also the time of year to take a look at your Health Savings Accounts or Flexible Spending Accounts, funds put aside for medical expenses that reduce your taxable income.
If you depleted these accounts in 2017 or you anticipate larger expenses in 2018, Peek recommends increasing your contribution. For HSAs, which roll over, she says you gain the most benefit by maxing out your contribution.
Similar advice goes for retirement accounts and educational savings plans, like 529s and 401(k) plans. Leverage your employer matches to the max — don’t walk away from free money.
BE CHARITABLE — AND KEEP RECEIPTS
This month also is a frequent time for donations to charities. If you are giving cash and not items, Peek says to remember to keep a receipt. Both types of donations are tax deductible.
Also, make sure to get receipts for any memberships to nonprofit organizations, like museums and other venues. These memberships, whether you are buying for yourself or as a gift, are often tax deductible.
PAY FOR EQUIPMENT AND SERVICES EARLY
For self-employed individuals and small businesses, December is a crucial month. Take a look at your budget and project needs for 2018 and buy what you can in 2017.
Will your business need new equipment? Buy it now. Pay your January rent in December. Prepay for any services you know you will be buying in 2018, like office cleaning, repairs or remodeling. Even buying gift cards for employees can all reduce your business’ overall tax burden.
This goes for college students, too. Buying books and other supplies in 2017 can help your or your parent’s tax return next year.
If you have any questions about any of these tips, don’t hesitate to reach out to our office for an appointment.
PHOTO CREDIT: (Checklist) publicdomainpictures.net–CC; (Evergreen tax tip) Alyson Raletz
Peekz ConsultiN LLC is a Pittsburgh-based accounting firm, located in the West Side, that caters to individuals, small businesses and nonprofit organizations. We aim to empower clients to help them take control of their finances and achieve their dreams.