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Cash Flow Planning for Life

Helping you reach your personal & professional financial goals.

6 Tips to Reduce Your Personal Income Taxes

Posted by Mark On March 26th

When you are reviewing your personal income taxes, it’s important to know all the tax deductions you qualify for.

Personal Income Taxes

This is the second installment of 16 Year-End Tax Tips for 2013
which can also be downloaded from our eBook library.

Here are six tips to consider:

Tip #1: Go Green!

  • Installing certain energy saving devices in your personal residence may qualify you for a tax deduction. This may include devices such as solar energy systems, small wind turbines, geothermal heat pumps, and Energy Star appliances (if they qualify). You can deduct up to 10% of qualified expenses, up to a maximum of $500 (this amount is a lifetime maximum). Complete installations must be before January 1, 2014.

Tip #2: Consolidate

  • If you are able to consolidate non-deductible debt (i.e. credit card and auto loans) under a home equity loan, then it is deductible. If you have the available equity in your home, you should look to pay off credit cards and auto loans with your equity lines. You can deduct the interest on up to $100,000 of home equity debt. Keep in mind that the debt must be secured by your home and it is not deductible under the AMT rules.

Tip#3: Bunch Itemized Deductions


  • Bunching itemized deductions into one year can have some valuable tax savings. If your itemized deductions are close to the standard deduction for your filing status, look at bunching multiple expenses into one tax year. A good example of this is real estate taxes. If your property taxes are due starting in November, and payable thru March of the following year, pay 2013 taxes in January 2014 and the 2014 taxes by December 2014. This planning idea will also work with medical expenses, mortgage interest and charitable contributions.

Tip #4: Pay State Tax Within This Year


  • If you’re not taking the standard deduction and have state
income taxes due, look to pay them by December 31. The year state income taxes are paid is the year they’re deductible. If the additional taxes are due because of increased income
 in 2013 and the tax is paid in
 2014, increased tax rates (due to
 higher AGI) in 2013 will make the 
deduction worth more in cash
  savings than if it was paid in 2014.

Tip #5: Review Taxable Brokerage Accounts

  • Review your taxable brokerage accounts to harvest any tax deductible losses or to offset gains in your portfolio. You will need to watch the “Wash Sale Rule”. This rule prevents you from claiming a loss on a sale of stock if you buy replacement stock within the 30 days before or after the sale. But, also keep in mind that the exchanging of a lager cap mutual fund for another is not considered a “wash sale”. Therefore, if you have a mutual fund that has not been preforming, selling it and purchasing another fund will keep you in the market and possibly create a tax deduction.

Tip #6: Think Ahead


  • Keeping up with the details of tax planning can save additional tax dollars over time. To reward yourself when it comes to tax planning, you must review your situation in the 4th quarter of a given year and look to the following year to determine which year the deduction will create the largest actual cash flow savings.16 Year End Tax Tips for 2013

Download our FREE eBook: 16 Year-End Tax Tips for 2013 for more more tips on reducing your personal income taxes. Do you  need professional assistance with your personal and/or business taxes? Are you looking for a Naples CPA or Fort Myers CPA?

Contact Makara & Associates, LLC online or call our Naples office (239) 384-9688 or our Fort Myers office (239) 768-5008. Follow us on Twitter and on Facebook.

– Mark

This information is based on facts, assumptions and representations as stated and authorities that are subject to change. We will not update this information for subsequent legislative or administrative changes of future judicial interpretations.
LEGAL NOTICE AND DISCLAIMER: The information within this blog is for informational and educational purposes only and is not tax advice and should not be used as such. The facts of each individual situation can have significantly different outcomes when applying tax law. The hiring of a CPA is an important decision not to be based solely on advertisements.

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