Year End Tax Tips

·        Review your portfolio.  Consider taking a loss if you have substantial capital gains. 

·        Review tax refunds.  Are you loaning your money to the government tax free?

·        If you owe state income taxes, consider contributing to a 529 College Savings Plan for your grandchildren.  NY allows a deduction up to $5,000 (or $10,000 for married filing joint filers) for contributions made by an account owner to an account belonging to NY’s 529 plan.

·        Plan your itemized deductions.  If you are on the border for itemizing deductions focus on bundling.  Time deductible expenses to produce lean and fat years.  The goal is to surpass the standard deduction amount. Standard deduction rates for 2013 are $12,200 for married taxpayers filing joint and $6,100 for single taxpayers.  The additional standard deduction amount for the aged or blind is $1,200.   

·        Save receipts for medical supplies and equipment such as insulin supplies, canes, braces, orthotics, eyeglasses, contact lens, hearing aids, etc.  Medical expenses must exceed 7.5% of adjusted gross income to be deductible.  (Note:  7.5% applies only to those aged 65 and older.  Those taxpayers younger than 65 use 10%.)

·        Make charitable donations and be sure to get a receipt.  If you are age 70 ½ or over and have an IRA, consider a direct transfer to an eligible charity of up to $100,000 per year.  Such a transfer is not taxed and may be used toward your RMD for the year.  (This provision is set to expire 12/31/13.)  Remember, any donation greater than $250 must be backed up with a letter from the charity.  

·        If you are looking to buy a new car (or other big ticket item) consider purchasing it by 12/31/13.  Unless Congress acts, the deduction for state and local sales tax will not be available after 2013.

·        Consider making energy saving home improvements by year-end but be sure to consult with your tax preparer first to be sure you have not used up all your available energy credits.

·        The amount of a gift excludable from a gift tax return for 2013 is $14,000 per person. 

·        If you are over the age of 70 ½, be sure to take your required minimum distribution (RMD).  The excise tax penalty is equal to 50% of the amount you were required to take.