There are four months left in tax year 2015 and enough time to make some smart tax savings steps or enough time to mis-step.
Here are three good tips:
- No brainer: fully fund your retirement plan. If you turn 50 in 2015, even if it’s December, you can increase your 401K or 403B contribution to $24,000 from $18,000. If you are self employed look at your options (solo 401K, SEP-IRA, Simple-IRA) or at least fund an IRA (you can do it through April 15).
- Start thinking about next year’s health insurance plan. Open enrollment season is coming up. If you can get a qualified high deductible plan you can fund a health savings account next year. It is tax deductible and not “use it or lose it” like flexible spending plans. I recommend comparing all your costs for the past years’ insurance premiums and out of pocket expenses with what a high deductible plan could mean for you. If you already have a qualified high deductible plan and haven’t funded your health savings account, do it! Your bank probably offers an account and will help you.
- If you itemize tax deductions on Schedule A, make noncash charitable contributions by December 31. Keep the receipts! Make notes about what you donated and the comparable thrift shop values. This can really add up and be a nice deduction. For higher dollar deductions like furniture, take a digital photo to further document the item.
Of course there are probably thousands more tax tips out there for you so keep an eye out for your tax savings!