With all the festive events and holidays coming at us the next few weeks it can be difficult to remember the ominous fact that lurks behind it all: The tax man cometh! 🙂
But don’t fret as there are three specific, tangible steps you can take now to minimize your amount of taxes due and for many to maximize your refund. No matter whether you plan every year to make your refund a savings-type account that you look forward to receiving or if you’re the type of person that tries to calculate your taxes to the point you break even these tips can work for you.
1. Start a business now and claim those expenses next year
We know many of you have been pondering when the right timing is to officially start your home business. Our answer is usually that there’s no better time than the present (just get started!) but that’s no less true now. In fact, the AWESOME reason to get started is that the expenses you incur now can be claimed as deductions when you prepare your taxes this upcoming January. And we all know that claiming those expenses means lowering your taxable income with the result of lowering your taxes paid and maximizing that return!
I recommend you check out Cassie’s post earlier this year how she brings in $3500 per month as a stay-at-home-mom with kids. She breaks down the income sources and just how easy it is to get started. While you are at it, don’t miss where we break down the steps to start your online business presence (whether starting a blog or not) so that it is a super smooth start. Plus don’t miss our free tutorials on YouTube to show you exactly how to get started as well!
Even better is here right in the heart of Black Friday weekend, you won’t want to miss a HUGE deal to save on your business domain name (actually free for the first year) with one year of hosting – all for $2.65 per month for a total of $31.80! When you consider that your investing in your future, maximizing your tax return AND saving money all at the same time it’s hard to pass this up.
Want to see if your business domain name is available? Use the following tool to check out if your domain is available. We get so excited each time we come up with a new business idea and find just the perfect domain – it’s like Christmas morning in our house! 🙂
2. Maximize your charitable giving before the end of the year
One thing we have learned throughout our lives is the importance of giving and this time of year is no different. In fact, the blessings we experience this time of year with our family, in a warm home and rejoicing this time of year only increases our desire to help others this time of year that might be struggling. And to be able to deduct those expenses on our taxes is just a side benefit (a nice one to be honest) to really help minimize that taxable income.
But the only way you can claim those deductions for this upcoming tax return is if you give this year. So as you’re working through your finances, make sure to plan your giving for this year and actually do that. There are many ways to give as well including cash, but also goods. And the benefit of donating goods is that you can also get your home cleaned out before the Christmas present unwrapping hits!
Plus, here’s a couple of other things to help you as you work through this as well:
- Make sure the charity you give to has a 501(c)(3) classification – Unfortunately if a charity you want to give to isn’t recognized as a Religious or Charitable organization by the government you can’t claim your charitable giving. However, you might be surprised at just how many organizations do indeed fall under this category. In fact, our membership to a local children’s museum near us not only gives us a full year of access to our children but counts as a charitable expense as well. You just never know so always make sure to do your research.
- Check your charity’s finances – We always love to ensure that the charities we give to are being good stewards of their received donations. If you happen to be giving to a charity that has over $1 million in revenues, you can use a site like Charity Navigator to check their overall rating, fiscal responsibility and amount of transparency with their finances. Otherwise, feel free to ask or even check out the charity’s website to see if they offer any information to help you know that your gift will be maximized.
- Some charities offer ways to boost your giving this time of year – One thing we love about some of the charities we support are that often they will have a donor offer to match all gifts up to a certain amount. We love this as we know that whatever we give that amount is “doubled” just by giving during this special time of the year.
- Giving online makes it easier for tracking purposes – Many charities allow online giving as well, so keep that in mind as it can honestly make your giving that much easier and even give you a bit easier time to track those expenses as well.
3. Increase your investments to pre-tax retirement accounts before the end of the year
Don’t forget that this could be the perfect time of year to maximize those pre-tax investments as well if you were planning to increase your investments – think 401(k). Of course, this means you need to jump on this pretty quickly, but you should be able to make those changes over the next few days to add additional investments into your portfolio. We will plan on sharing more tips on maximizing these pre-tax contributions, but make sure you consider maximum contribution amounts, catch up contributions (for those workers ages 50 and over) and even IRAs as well. At the very least, for those employees working at a company that offers a match (up to 6%) make sure that you take full advantage of that as it will essentially double your contribution.
We hope these three specific tips will help you maximize both the short term tax benefits as well as your long-term goals (whether it be starting your online business or even building a larger retirement fund for you and your family).
Share with us any other ideas you use to maximize your refund below. And are you the type of person that maximizes your refund or the one that calculates and comes as close as you can to breaking even? Remember, no matter which you are these tips can work for you!