If you haven’t filed your taxes for 2013 yet, you are not alone. According to the Internal Revenue Service (IRS), they receive roughly 20% of all individual tax returns in the week before April 15th. This year is expected to be a rough one for tax payers as a number of tax increases took effect in 2013. Higher income earners (>$500,000) often saw their top rate shoot from 35% to nearly 44%! The following are some last minute tips that could potentially help you save a little bit as this year’s tax season winds down:
- Make a tax deductible contribution for 2013 to a Traditional IRA prior to April 15th– Tax payers under the age of 50 can contribute up to $5,500 for 2013 while tax payers over the age of 50 can contribute $6,500 for 2013. There are some nuances to this move so please be sure to check with a qualified financial advisor or tax preparer before pulling the trigger. IRS Publication 590 can also be utilized as a reference.
- Make a tax deductible contribution to a SEP IRA prior to your tax filing date (April 15 or October 15)– If you own a small business and don’t have too many employees (or better yet- no employees), this could be a good option. The contribution limits to a SEP IRA are 25% of compensation or $52,000; whichever is less. Keep in mind that you must contribute the same percentage of salary to all employees covered by the SEP IRA plan. IRS Publication 560 is also a good reference when learning more about SEP IRAs.
- Make a tax deductible contribution to a qualified Health Savings Account prior to April 15th– If the HSA account was established prior to 12/31 of the previous year, these contributions are permissible and deductible. The limit for 2013 is $3,250 per individual or $6,450 for a family. An extra $1,000 can be added if a tax payer is 55 or older. Please consult with your tax advisor or health insurance agent prior to making this move.
Unfortunately most tax saving moves must be completed in the calendar year for which you are filing but hopefully the tips above can help some of you. Please know that we are always available to answer any of your questions as well as address potential tax issues prior to the year end. The easiest way to avoid tax surprises is to make sure you meet with both your financial advisor and tax preparer in November or early December. This will at least give you several more options for helping to take a bite out of your tax bill. Best of luck to all this tax filing season!!
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.