Time is running out for 2013 tax cutting

There’s not much time left for you to make beneficial tax moves for 2013. Consider these possibilities.

  •  Maximize retirement plan contributions. For 2013, you can put $17,500 in a 401(k) plan, $12,000 in a SIMPLE, or $5,500 in an IRA. If you’re 50 or older, you can set aside even more as “catch-up” contributions.
  • Decide whether to sell investments to offset gains or losses already taken this year. You can deduct $3,000 of net losses against ordinary income.
  • Estimate your tax liability for 2013, taking the new Medicare tax increases for higher-income taxpayers into account. If you’ll be underpaid, adjust your final quarterly tax payment or your December withholding.
  • December 31 is the deadline for taking a 2013 required minimum distribution from your traditional IRA if you’re 70½ or older. Miss this requirement and a 50% penalty could apply.
  • Purchase needed business equipment to use the first-year $500,000 expensing option for new and used equipment and 50% bonus depreciation for new equipment.
  • Make energy-saving home improvements that could qualify for a lifetime tax credit of up to $500.
  • Finalize annual gifts to use the 2013 exclusion from gift tax on gifts of up to $14,000 per recipient.

Contact our office for details on these and other year-end tax moves.