Even though the looming fiscal cliff has many worried about their finances, the Illinois CPA Society has a few tips that could save you money before the new year.
Making and itemizing charitable donations like monetary gifts, materials, food donations, or out-of-pocket expenses you incur while volunteering can all lead to deductions on your 2012 tax return. To make this process easier, always get receipts when donating. You can also gift someone with up to $13,000 before it becomes taxable. A 529 College Savings Plan for your children or grandchildren allows up to a $13,000 tax-free contribution.
Paying bills early can also help. If you pay your January 2013 mortgage payment on or before December 31, that could deduct an extra month of interest in 2012.
Also, a contribution to your 401(k) plan is considered pre-tax money and is excluded from your income, causing a lower tax bill. Those under 50 can contribute up to $17,000 in 2012, tax free. Those over 50 can contribute up to $22,500.
Finally, work to maximize your deductions. Moving expenses if you moved for work could qualify for a deduction, as could some job-hunting expenses like making copies of your resume.
For a full list of deductions, visit www.irs.gov.
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