6 Smart Moves to Cut Your Tax Bill Before December 31st

There are only a few weeks left before the end of the year, and if you're looking to cut your tax bill, there's still time! Here are seven ways to reduce your taxable income: 

1. Make charitable donations. 

Donations to charitable organizations are one of the most common deductions people take. If you itemize your deductions, you can deduct the amount of money you donated to a qualified organization. Keep in mind that there are some restrictions on what types of organizations qualify – check with a tax professional or the IRS to make sure your donation will be deductible.

2. Invest in a retirement account. 

Investing in a retirement account is another great way to reduce your taxable income. Contributions to traditional IRA accounts are tax-deductible, and while contributions to Roth IRAs are not deductible, the earnings grow tax-free. Either way, investing in a retirement account can help you save on taxes.

3. Take advantage of tax-free investments. 

There are a few types of investments that are completely tax-free, including municipal bonds and certain types of annuities. If you're looking for a way to invest without paying taxes on the earnings, these may be worth considering.

4. Sell losing investments. 

If you have any investments that have lost money this year, selling them can help offset any gains you've made elsewhere. This is called "tax-loss harvesting," and it can be a great way to reduce your tax bill. Just be sure to follow the rules – if you sell an investment for a loss and then buy it back within 30 days, the IRS will treat it as a wash sale and you won't be able to claim the loss.

5. Defer income into next year. 

If you're self-employed or have other income that's not subject to withholding, you may be able to defer some of your income into next year. This can be a good way to reduce your taxable income in the current year, while still having the money available when you need it. Just be sure to make estimated tax payments if you do this, so you don't end up owing taxes (and possibly interest and penalties) when you file your return next year.

6. Invest in energy-efficient home improvements. 

Making energy-efficient improvements to your home can also help reduce your tax bill. The Residential Energy Efficient Property Credit allows you to claim a credit of up to 30% of the cost of certain improvements, such as solar panels or insulation. This credit is available for both new and existing homes, so if you're planning any home improvement projects, be sure to check whether they qualify.

By taking advantage of these strategies, you can save money on your taxes before the end of the year. Pricewise is your individual and business tax accountant. Give us a call to day to make sure you're taking all the appropriate steps – and remember, it's never too early to start planning for next year's taxes!