Here are 3 quick and easy ways to save on taxes this year.
1. Spit income. If you are married or have a common-law spouse, you can split your income and possibly save on taxation. The reason this works is because our tax system is progressive, meaning the more you make, the higher percentage you pay, unless, of course, you’re a Romney, then you don’t (just kidding there, No political agenda meant). This may allow you to optimize deductions and tax credits available.
2. Trusts. If you have a hefty amount of assets, it is time to stop procrastinating the funding of your trusts. The 5 plus million dollar gift tax exemption is set to expire and reset to the 1 million dollar mark at year-end. While this may not be an immediate tax savings, it’s something that needs to be effected and funded near immediately to take advantage of the current tax breaks before they expire.
3. Don’t forget the dependent care tax credit. Basically, if you pay someone to care for a dependent under age 13, you may qualify for a tax credit up to $2,100. This depends on your adjusted gross income and is a percentage of care costs of between 20% and 35%. This credit isn’t just for child-related care costs either. If you pay someone to look after a spouse or dependent of any age, such as a disabled family member, you may be eligible.
As always, we recommend you visit with a tax professional on any thoughts mentioned here. We are not CPA’s or certified in any way to give tax advise and recommend you take these suggestions to your professional, or contact ours at firstname.lastname@example.org.