We’ve made it through the 2011 tax season and now it’s time to hone in on 2012 taxes. You have exactly 20 days left in the year to take tax action. Here’s a few tasks you can take on to help you pay as little as possible in taxes next year:
Charitable Deductions: Donate any good condition, unused clothing, apparel, shoes, and accessories are to your local charitable organization. Keep in mind you must donate all items to a qualified organization. Giving money to political organizations and individuals (especially not your college-age children) doesn’t count. To find a qualified organization, use the Charity Navigator or a similar site to find deserving nonprofits that serve causes you care about.
eSmart Tax makes it easy to keep track of your eligible charitable tax deductions with our Charity Deductions calculator. To learn more, visit our Premium Edition page.
Contribute as much as you can to retirement accounts: In 2012, you can contribute up to $17,000 to your 401(k) or other employer-based plan. if you're 50 or older you can contribute a maximum of $22,500. You can also contribute up to $5,000 ($6,000 if you're 50 or older) to an IRA where contributions to traditional IRAs may be tax deductible.
Give gifts before the end of the year: This is especially important because the estate tax and lifetime gift tax exemption will drop to $1 million, from $5.12 million if Congress does not take action. The maximum estate tax rate will also jump to 55% from 35%. Talk to your estate-planning attorney or tax advisor for the best way to handle this upcoming change. Individuals should also look to consider the annual $13,000 gift tax exclusion. You can give $13,000 to as many individuals as you like, tax-free (married can give $26,000 per recipient.)