Business & Personal By Kim Hegwood

2013-12-04
 Hegwood's Tax Moves To Consider for December 2013

"The only person you are destined to become is the person you decide to be." -Ralph Waldo Emerson

When we make informed tax decisions, it is always best, of course, to start with real data. That is why a good first step in any tax planning environment is preparing a draft tax return, to see where things stand before you make any hasty moves. No -- you do not have to fill in every line of your 2013 Form 1040. But a down-and-dirty analysis of what your upcoming tax return might look like could reveal some tax areas that you need to take care of by Dec. 31. This is something you can often do on your own, or in a tax-planning meeting with your accountant.

Next, it is always a good idea to harvest tax losses: Did you sell some assets earlier for a nice gain? Or are you expecting your mutual funds to provide you with a nice payout of dividends and/or capital gains distributions? Look for some losers in your portfolio to offset that added income.

Take a quick look at your withholding -- and you can make some last-minute shifts to ensure that you are not overpaying, or to prevent yourself from being slapped with an underpayment penalty (yes, those do exist).

And then, of course, you move to the meat of your possible moves. Before December 31, it would be a great idea to look into...

•  Adding to your 401(k) or other company-sponsored retirement plan.
•  Winterizing your home with upgrades that qualify for the energy efficiency tax credit of up to $500.
•  Spending down your medical flexible saving account (FSA) balance.
•  Bunching deductible expenses, both miscellaneous and medical.
•  Maximizing the sales tax deduction with a tax-qualifying major purchase.
•  Giving to your favorite nonprofit.
•  Paying next semester's college costs early and counting the costs toward the American Opportunity tax credit.
•  Considering ways to defer income if it will push you into a higher tax bracket.

All of these are great topics for a meeting with your tax accountant. Come armed with this, and tell them Hegwood sent ya! (And if you would like a referral to a good accountant, let me know.)

To your family's well-planned saving over the holidays...

Warmly,

Kimberly Hegwood
281-218-0880





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