This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

7 year-end tax tips to keep Uncle Sam out of your wallet

Right after the most wonderful time of the year comes everyone's least favorite season: tax season.

If you usually try to avoid thinking about taxes until after January 1, you may be missing out on the chance to save a little money. According to some tax experts, now is the time to take last-minute action if you want to reduce your tax bill in April.

7 Year-end Tax Tips

1. Double-check your tax withholdings and payments

"Before year's end, take a peek at your income," advises Mary Kay Foss, a Certified Public Accountant with Sweeny Kovar in Danville, Calif. "Check your last paystub and year-to-date income from brokerage accounts. Estimate December and compare the figures to what was on your last year's tax return. Also compare your withholding and scheduled estimated tax payments to last year."

Why do all that? You want to be sure you have sent enough money to the taxman in 2013 and won't get stuck with a huge bill -- or worse, penalties -- in April.

If your income has increased significantly but your tax payments have not, it is time to either ask your employer to increase your December withholding or send in extra with your year-end estimated tax payment.

2. Update your contact information

If you have moved in the past year, you don't want to miss any deductions because of misrouted mail. Make sure your address and contact information is current with all the organizations that may be sending you tax forms. These include investment firms, mortgage companies, and your previous employer if you have changed jobs since the move.

3. Be extra generous

"Year-end is a good time to go through closets and cupboards and donate unwanted items to charity," says Foss. "Be sure to get a receipt and you'll get a tax deduction as well as a warm feeling."

Foss also says seniors should be aware that their ability to make qualifying charitable distributions from their IRAs is expiring in 2014. According to the California Society of CPAs, the Emergency Economic Stabilization Act of 2008 allows those age 70 ½ or older to transfer up to $100,000 tax free from their IRA to a qualified charity.

The provision allowing the distributions expires in 2014, although Foss says Congress could extend it. Still, seniors who want to be sure they can make this generous gift should take action by December 31 to ensure they don't miss their window of opportunity.

4. Focus on lowering your AGI

If you are going to be buying your own health insurance through a government exchange in 2014, you may want to work on lowering your AGI. "Affordable Care Act subsidies are based on adjusted gross income starting in 2014, so keeping that low is a priority," says Foss.

One way to reduce your AGI is by asking your employer to defer any bonus pay until January. For those who are self-employed, you can delay invoicing clients in December and make those payments due next month.

5. Prepay your taxes

Another way to lower your AGI is to prepay your 2014 property taxes and state income taxes, if applicable. Both are deductible on your federal income tax form and can help drive down your adjusted gross income.

6. Unload your losing investments

If you are going to be stuck paying a capital gains tax this year, think about unloading your underperforming investments. You can use your losses to offset your gains -- and if your losses exceed gains, you could even write off up to $3,000 from your annual income. Think you lost more than that? No worries, since excess losses carry over year to year.

7. Make your large purchases now

Finally, if you are planning to buy a car, boat or other major purchase, you might want to squeeze that in before the end of the year.

"The sales tax deduction goes away in 2014," explains Foss. "If you deduct sales tax rather than income tax, don't plan on it for 2014."

While Congress could reinstate the deduction, Foss says it is better to assume it will be gone rather than to assume it will be back.

The taxman cometh, but you can still take some last-minute action to keep your money in your pocket and out of Uncle Sam's hands. If you need help, Foss advises individuals to read the instructions on their tax forms, head to for resources, or get a referral to a trusted CPA from family and friends.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs