In high-tax states, the tendency to not itemize expenses may also be reinforced by capping the amount you can deduct for state and local taxes (SALT). It’s $10,000, or $5,000 if you’re married, filing separately.

If you find it makes sense to itemize, check out the following list and see if any of these strategies will help you minimize what you owe.

1. Get deductions in writing

If you have done any type of charitable contribution this year, obtain a written receipt for your records from the host organization. To deduct donations over $250, a receipt is required by the Internal Revenue Service (IRS).

The IRS now requires tax filers to itemize their contributions on Appendix A and be able to provide proof that their contributions and deductions are genuine.

If your non-cash gifts, such as clothing or other tangible goods, exceed $500 in total value, you will now need to include Form 8323 with your declaration in order to benefit from the deduction. The amount you can claim must equal the proceeds donated to the charity when your item(s) are sold.

However, if your donations are not sold before the end of the year, you will have to wait until they are sold before you can deduct an amount for them. To find out more, visit IRS Information on the justification of non-monetary contributions.

2. Postpone write-offs

If it looks like you won’t itemize, consider deferring substantial year-end charitable contributions to next year if you think you’ll be more likely to be able to write them off then. This could, for example, allow you to double your contribution next year, making it large enough to give you a better chance of qualifying retail.

This also applies to unreimbursed products. medical expenses and other types of deductible transactions or expenses whose timing you can control. Unreimbursed medical expenses greater than 7.5% of adjusted gross income (AGI) are deductible for all taxpayers, not just those aged 65 or over.

Additionally, if you make a charitable donation in December with your credit card and pay it back later, it will be deductible for the month/year in which the donation was made.

Or pay and write off expenses this year

Conversely, if you itemize your taxes but it looks like you won’t be able to do so next year, consider paying expenses now that you could otherwise deduct next year. This could strengthen your refund this tax year.

These can include charitable contributions, quarterly estimated tax payments, medical expenses, and property taxes.

3. Time savings and losses

Work with a tax planner or investment advisor to determine if, when and how to sell securities that have appreciated or depreciated in value.

Long and short term capital gains

To deduct losses, you must be able to deduct them from gains. Generally, it is necessary write off losses related to the sale of securities that you have held for more than a year (long-term capital losses) against the capital gains that you have realized on the sale of other securities held for a year (long-term capital gains term).

Winners and losers you hold for the short term (one year or less) should be treated the same. You will then calculate your long or short term net gains and losses relative to each other to arrive at a final short or long term net gain or loss.

If you are simply selling losers to subtract them from winners, make sure you place all your trades by the last business day of December so they count for this year.

There is a $3,000 limit on the amount that you can deduct stock market losses from your ordinary income in one year; If you lost more, you may be able to deduct the remaining balance on your tax return next year.

4. Choose your cost basis carefully

There are several ways to calculate your cost basisbut the method you choose from year to year can sometimes make a big difference on your taxes.

For example, if you sell a large number of shares at a very large profit and need to report that income, you may be able to choose to use an identical number of shares purchased at a higher price as a basis (if not is already done). . The rules to follow can be complicated and require professional assistance.

Donate Stock

If you don’t have any prizes you can use at a decent price, simply consider donating some or all of your appreciated stock to charity.

You can take a deduction for the total fair market value up to certain limits and escape capital gains tax completely as long as you have owned the securities for more than a year. This can be done in place of a cash donation, which can ease your vacation budget.

Generally speaking, calculating and reporting costs is easier than before because financial companies are required by law to provide this information annually for all of your buying and selling transactions.

5. Make an income, if necessary

If your income turns out to be significantly less than you expected, it might be wise to sell appreciated securities or convert a traditional IRA or retirement plan in a Roth account. This can allow you to use tax credits and deductions that you might not otherwise benefit from.

For example, if you were laid off in February and couldn’t find another job before Thanksgiving, your combined deductions and credits could well exceed your income for the year. You can take advantage of this opportunity to effectively reduce or eliminate your tax bill on your appreciation securities or Roth conversion by doing so now and crediting your deductions against this amount.

6. Pay or increase contributions to the retirement plan

Keep cash on hand to increase or increase your IRA Or employer-sponsored retirement plan contributions if your year-end income estimate shows you could find yourself in a higher tax bracket this year.

You can make IRA contributions until the deposit deadline in April of the following year, but your 401(k) Or 403b) Contributions must be paid before December 31. If you are 50 years or older, you can pay catch-up contributions to most plans that will increase your tax deduction.

7. Buy for next year, deduct this year

If you own a business or have deductible business expenses, purchase the items you’ll need next year by the end of this year. This will allow you to amortize the expense this year rather than the following year, and thus reduce your income. This can make an especially big difference if you’re purchasing an important item.

The essentials

There are various steps taxpayers can take to reduce their taxable income or minimize their income before the end of a year. Be sure to find out what deductions you are legally entitled to. If you are self-employed, also check additional benefits for your tax situation.