Easy ways for you to save money during the 2022 tax season
HOUSTON - We’re just two days from the end of the year, so you still have time to take steps now that can reduce your taxes.
According to Certified Personal Accountant (CPA) Ed Gardner, there are some bills you may not want to pay until after the new year, if you don't have more itemized deductions than the standard deduction, such as medical bills or property taxes.
"We’re limited to $10,000 on property tax," he explained. "So if you haven't paid your property tax for 2021, and you’re going to take the standard deduction, then you might consider not paying it now and paying it at the beginning of January."
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As for things you can pay now to cut your taxes, you can make an extra mortgage payment by December 31st.
"If you have enough to itemize, you might entertain making the January payment now, so you can deduct that interest," said Gardner.
This year is the last year you can take the standard deduction and still deduct donations to a 501c3.
"If you take the standard deduction and you’re single, you can take up to $300 for charity, and for a married couple they changed it this year to up to $600," said Gardner.
Then take a look at your retirement contributions.
"You might see about making sure you maximized your 401k plan or your 403b plan, your different retirement plans that you have, with elective contributions you can make at work," he suggested.
Those must be contributed by December 31st. You have until April 15th to add more to your IRA or Health Savings Account to cut your taxes.
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You can also sell investments that have gone down in value.
"I call it harvesting the losses, where you go ahead and sell stock now so it would offset any capital gain you had on selling stock earlier this year," Gardner said.
Be sure to spend money in your Flex Spending Account by Friday so you don't lose it, unless your employer took advantage of a federal law giving you an extra 2.5 months or that lets you carry $550 over to next year.
You can estimate your taxes using this Nerdwallet calculator.
This is also a good time to make adjustments to your W-4 withholding.
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And Twitter is buzzing with a report that the IRS requires criminals to report their ill-gotten gains as income.
We verified that with Gardner, who says, "that's right, because that’s income to you. Of course, whether people do that is another story."
According to IRS.gov, people with income from the illegal activity must report it in line 8z on Schedule 1 of the 1040 form, or on Schedule C for self-employment activity.
IRS guidelines say, "If you steal property, you must report its fair market value in your income in the year you steal it unless you return it to its rightful owner in the same year."
MORE: Stolen property, income from illegal activities must be reported on taxes, IRS says