You Still Have Two Days To Pare Your 1996 Tax Bill
Want to save hundreds or perhaps even thousands of dollars on your 1996 income taxes? Don’t wait for those frenzied days before the April 15 deadline.
There are just a few short days left to dramatically lighten this year’s tax burden, and there’s plenty consumers can do to trim their bill.
“Almost everybody can save real money, based on how they behave between now and Dec. 31,” said Alan Connors, a tax planner and accountant in Brooklyn.
The key is to act quickly. Here are some tips from accountants and experts:
Contribute to charity. Donations of up to 50 percent of your income made before Dec. 31 are fully deductible.
But IRS rules demand written documentation from the charity for gifts of $250 or more and an appraisal of non-cash gifts over $5,000.
“The IRS has gotten so tough about charitable giving that a canceled check isn’t good enough anymore,” said Andrew Blackman, an accountant with Shapiro & Lobel. “Get an acknowledgment from the charity.”
Defer 1996 income to ‘97 to lower your taxable earnings.
If you’re self-employed, send out bills Dec. 31 so customers can’t pay you until next year. If your company hands out year-end bonuses, persuade it to hold yours until Jan. 1.
Pay your January mortgage bill this month.
“Make 13 mortgage payments a year instead of 12 on your co-op, condo or house so you can deduct more interest and real estate taxes,” said Daniel Pilla, a tax litigation consultant and author of “How to Fire the IRS.”
Tally up your medical bills. Keep in mind that only expenses that total more than 7.5 percent of your income are deductible, so if you make $50,000 a year you need more than $3,750 in bills to qualify for this deduction.
But if you are close to that threshold, consider speeding up big medical payments this week to put you over the top.
Don’t forget to include lab costs, prescription drugs, medical supplies, mileage to and from the doctor and out-of-pocket health care insurance paid at work when adding up the total.
Take a stock loss. If you’ve reaped profits by selling stock this year, offset those gains by selling other shares that have been pummeled.