Monday, December 30, 2013, PM | 1 Comment
As 2013 comes to a close, most people are thinking about the holidays. Those who like to look ahead are already preparing to limit their tax expenditures for the current tax year. The end of the year is a great time to make charitable donations, but there are additional options that can cut the average tax bill.
Here are five that can help, and some of them will be phased out after this year unless extended by Congress.
Improve Energy Efficiency
It is possible to claim a tax credit of up to $500 for making a home more energy efficient. The credit is 10 percent of all materials purchased up to a maximum of $5,000. For example, if you live in Virginia, you could claim a tax credit part of your bill from the Richmond insulation company. Upgrades can help save energy costs and contribute a tax credit at the same time.
State and Local Sales Tax
For 2013, it is possible to claim an exemption for either state and local income or sales tax. For those with smaller incomes, adding up the sales tax on receipts might be a better option for saving on the annual tax bill. Those living in states that only have sales or income taxes, but not both, might have their decisions made for them.
Buy School Supplies
Teachers can deduct up to $250 for out-of-pocket expenses that are used on school supplies. This deduction is going away so now is the perfect time to take advantage of any anticipated teaching needs.
Charitable IRA Deductions
This year, those who are age 70 have to take a minimum deduction from their IRA. It is possible to claim $100,000 of IRA distributions as a charitable contribution. This option might be more advantageous than taking the tax hit for those who are looking to donate funds to charity anyway.
Buy an Electric Vehicle
The government has offered a tax subsidy to consumers who purchase certain electric models. This tax benefit is tied to the green energy initiatives that have been popular in recent years. This tax credit is scheduled to expire at the end of the year, but those who purchase a new vehicle that qualifies will have the option of claiming a $7,500 tax credit for their purchases.
No one likes to pay taxes, and the wealthy are noted for their ability to avoid paying more than the absolute minimum in taxes. The previous credits are available for middle-income Americans, and they can definitely cut tax bills for 2013.Facebook.com/doable.finance