Fourth Quarter Moves to Lower Your Tax Liability

Email  Print Print  

CalculatorThe last quarter of 2011 in upon us, and now is a great time to reflect on how you can reduce your tax liability for the year. There are still some moves you can make during the last part of the year to reduce the amount of money that you owe in taxes. Get ready for tax season now, plan ahead for your deductions, and you will have a smoother experience.

You can still get some tax credits for energy efficient upgrades to your home, but not everyone I planning to add better windows to a home, or install a solar power system. Instead, you can also do some things now to lower your taxable income for 2011.

Tax Deductions Available for the End of the Year

Really, you can take these tax deductions all year. However, many people don’t think about how certain spending can help you reduce your taxable income – and how much you owe the government. Remember, though, that a tax deduction isn’t the same as a credit; you won’t get a dollar for dollar reduction in your liability (as you would with a credit), but the right deduction can keep you in a lower tax bracket, and lower the amount of income you are required to pay taxes on.

Here are a few basic things you can do to lower your taxable income right now:

  • Donate: Donations are tax deductible when you itemize. You can donate to your favorite charity, or to your church, and receive a deduction. You can also donate goods; it doesn’t need to be money. Donated items in good condition can be tax-deductible for their market value. Make sure you get a receipt for your records, though, whether you donate money or goods.
  • Retirement account contributions: Check your retirement account contributions. Are you maxing them out? If you have room to contribute to your 401k or traditional IRA, go for it. Upping your contributions can be a great way to reduce your taxable income. Don’t have a retirement account? Open one. The money you put in will be tax deductible. Remember, though, that Roth contributions are made after-tax, and you won’t get a deduction for those contributions.
  • HSA contributions: If you have a Health Savings Account, you can make tax-deductible contributions – as long as you qualify for the account by having a high deductible health plan. If you have this type of set-up, you can make contributions, use the money for qualified health care expenses, and lower your taxable income.
  • Sell losing stocks: While you don’t want to get involved in panic selling, it can be a good idea to sell in some cases. If a stock is no longer fitting your needs, or if you are changing your asset allocation, you might want to sell some losing stocks. You can use some of your losses to offset capital gains, and other income. Just make sure it works with your overall financial plan.
  • Business travel: It’s conference season. (Confession: I’m writing this while on an airplane, heading to FINCON11.) If you are planning some business travel, for a conference, a meeting, or for some other purpose, you can deduct some of your expenses related to business travel. If you are still looking for another deduction, plan a business trip.

With a little planning an foresight, you can spend a little more money and reduce your taxable income, and pay less to the government.

(Photo: davedugdale)

{ 4 comments, please add your thoughts now! }

Related Posts

RSS Subscribe Like this article? Get all the latest articles sent to your email for free every day. Enter your email address and click "Subscribe." Your email will only be used for this daily subscription and you can unsubscribe anytime.

4 Responses to “Fourth Quarter Moves to Lower Your Tax Liability”

  1. thunderthighs says:

    Good timing on the list. I hate when these things appear in December.

  2. Cynthia says:

    I recommend against the qualified plan (401K, IRA, etc.) due to the public government statements discussing the nationalization of these monies in return for a government annuity ala SS. Even though not law, not introduced as legislation, the discussion shows that lawmakers view these funds as a source of revenue the need of which will only grow as the Federal Government grows.
    In addition to the above political risk the history of restrictive alterations in pension law since inception of the pensions laws results in the taxpayer’s/owner’s loss of control of their plan.
    There are other ways to reduce taxes while maintaining control of your funds.

    • Ben says:

      I also wonder about taxes in years to come. Sure, you get a break now, but will it really be worth it years down the road?

  3. Kali says:

    So I have just recently bought my first home and got married. Going in completely blind into this next years tax season somewhat scares me. My biggest worry is having to owe money. This article has helped me find ways to help lessen the blow for years to come. Thank you for such great advice!

Please Leave a Reply
Bargaineering Comment Policy

Previous Article: «
Next Article: »
Advertising Disclosure: Bargaineering may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.
About | Contact Me | Privacy Policy/Your California Privacy Rights | Terms of Use | Press
Copyright © 2016 by All rights reserved.