Tax Saving Opportunities Before 2013 Ends

| Alerding Alerts

There are many tax-saving steps that can be performed before the end of this year. Here is a list of some key actions that should be considered before Dec. 31, 2013 to save on your taxes:

  • Make energy saving improvements to your home that qualify for tax credits in 2013.
  • Make sure you’ve contributed to an Indiana 529 plan and earn up to a $1000 credit.
  • Realize losses on stock while substantially preserving investment position.
  • Increase basis in S corporation or partnership to make possible a 2013 loss deduction.
  • Put business equipment in service before year-end to qualify for the 50% bonus first-year depreciation allowance.
  • Use credit card to prepay business expenses.
  • Ask employer to increase withholding of state and local taxes to pull the deduction of those taxes into 2013.
  • Decide whether to elect to deduct investment interest against capital gains and/or qualified dividends.
  • Take steps to avoid or minimize income tax on Social Security benefits.
  • Arrange with employer to defer bonus until 2014.
  • Pay contested taxes to deduct them this year while continuing to contest them next year.
  • Settle insurance or damage claim if this will maximize casualty loss deduction.
  • Apply bunching strategy to “miscellaneous” itemized deductions, medical expenses and other itemized deductions to increase deductible amounts.
  • Increase withholding to eliminate or reduce estimated tax penalty.
  • Set up self-employed retirement plan.
  • Make gifts taking advantage of the $14,000 gift tax exclusion.
  • Watch out for marriage penalty in regard to year-end marriage or divorce plans.
  • Convert investment income taxable at regular rates (e.g., interest income) into qualifying dividend income.
  • Structure real estate deal to avoid paying interest on tax deferred under installment method.
  • Dispose of passive activity investments to free up suspended losses.
  • Consider deferring a debt cancellation event until 2014.
  • Make expenditures qualifying for the $500,000 business property expensing election.
  • Avoid personal holding company tax by making dividend payments.
  • Step up level of participation in business activity to meet material participation standard under passive loss rules.

Contact your Alerding CPA Group representative to assist you with taking advantage of these tax reduction opportunities @ 317-569-4181.  Alerding CPA Group is an  Indianapolis-based public accounting firm.