5 Unusual Tax Moves to Make Before the End of the Year Tip 1: Use Your Credit Card Financial advisors usually discourage using credit cards, but if you handle them responsibly by paying off the balance each month to avoid interest, it can be beneficial. The significant advantage of using a credit card is that the tax deduction occurs at the time of purchase, not when you pay off the card! This is especially useful for deductions you typically pay at the beginning of the new year, such as charitable donations and property taxes (if your limit does not exceed $10,000). Tip 2: Clean Out Your Closet You know you have items you never wear. Your children have toys they don’t play with. Why not spread some holiday spirit and help those in need? The rules aren't too complicated: write down what you're donating, get a receipt, and keep the total under $5,000 to avoid the need for an appraisal. Your deduction is the lesser of the amount you paid or its current value. Tip 3: Increase Your Tax Withholding If you had additional income from side jobs and didn't make estimated tax payments (quarterly payments) to cover taxes on that income, you might face a penalty. It's important to know that the underpayment penalty rate is 8% according to recent IRS updates! To avoid penalties, the IRS requires that you pay at least 90% of your annual tax evenly throughout the year. Tip 4: Delay Prepayment of Property Taxes Your property taxes are typically paid in two installments. When interest rates on savings were low, it was convenient to pay everything at once. However, with the current $10,000 cap on state and local tax deductions, prepaying property taxes may not provide you with tax benefits. Given the current savings account interest rates, which can exceed 5%, it’s wise not to move your money earlier than necessary. Tip 5: Get Quick Cash Using Your IRA If you are facing financial difficulties and are confident that you can repay the funds within two months, you can take advantage of borrowing from your Individual Retirement Account (IRA). There are only two rules: repay the amount within 60 days and use this method no more than once every 12 months. There are no penalties or taxes for this. Use Our Calculators to Plan Your Financial Matters: https://calculator.tax/ #TaxTips #FinancialPlanning #EndOfYear #TaxDeductions #CreditCardBenefits #CharitableDonations #TaxWithholding #PropertyTaxes #IRA #QuickCash #TaxSeason #PersonalFinance #SmartMoney #Savings #TaxStrategy #YearEndPlanning #FinancialAdvice #MoneyManagement #TaxSavings
Using a credit card for tax-deductible purchases can accelerate your deductions. Plan strategically!
Billy's handyMan Services, Buffalo NY 14214. You can find me on facebook
1mothe worst thing you could ever do is allow the government know anything about your banking period!! That's what I love about Cash app. it's not connected to any my financial institutions, routers, or banking ties. I only use cash app if my customers don't have cash on hand. Even though I have a Antique business, but I also have Bill's HandyMan Services, all cash paid. Most of my jobs are bartering. ie paint a whole house for a use car, truck or whatever is in the trade. I prefer the bartering over cash or digital. Bartering can't be traced or tracked. The credit card, tracks everything about you, and some hacker can take that all away, or in the case with joe Biden WWIII, an EMP crashes everything, bitcoin and other digital money worthless and non-accessible.