Five Last-Minute Tips to Cut Your Tax Bill
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Hello and welcome to Money Girl's Quick and Dirty Tips for a Richer Life.
Today's topic: Year-end tax planning.
The end of the year will be here soon and you have until Dec. 31 to take action to pay as little as possible in taxes to Uncle Sam.Here are a few tips about things you can do before the year is out to reduce your tax bill.
Donate to CharityTip 1: If you want to donate to your favorite charity, do it before midnight on Dec. 31. Now, saving on taxes isn't a good enough reason in and of itself to donate to charity. But if there's a cause you want to support, go ahead and donate before the end of the year to reap the tax benefit this year. If you itemize deductions on Schedule A, you'll save on taxes by donating to charity. If you're in the 25% tax bracket, for example, you'll save a quarter for every dollar you donate.
Pay Your January Mortgage Payment in DecemberTip 2: Consider paying your January mortgage payment in December. It will mean a bigger mortgage interest deduction for you this year. If you can easily afford to do it, also consider paying your property taxes for next year before this Dec. 31. You get to deduct them in the year you pay them.
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