Cut Your Tax Bill With These Year-End Tips
Don't come looking for tax deductions next April when you finally get around to doing your tax return. The time to act is now -- at year's end -- when no one wants to think about taxes. If you want to save tax dollars next spring, here's what you should be doing now:
Give Money Away
It's the season to be charitable, and charity begins at home. Gifts of cash to family and friends aren't deductible, because they aren't IRS recognized charities -- but those gifts could reduce your ultimate estate tax (depending on when you die). You can give up to $12,000 to any number of people if you care to spread your wealth.
One good option: Open a 529 College Savings Account and you can combine up to five years of the annual gift -- for a total of $60,000 -- to grow tax-free over the years to pay for college expenses. (Tip: If you don't have children or grandchildren, open an account anyway in your name, and then you can transfer the tax-free assets for use of a "future child" to pay for college!)Be smart about your giving. If you want to be sure your tax-deductible donation is going to be put to good use, go to www.guidestar.org, where you can check on a charity as well as actually make an instant donation online.
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