Taxable Talk

The IRS sends out tax tips, and this morning’s tips are worthy of a repeat: Start a filing system, make charitable contributions, and contribute to retirement accounts.

The IRS first noted that individuals should start a filing system.

If you don’t have a filing system for your tax records, you should start one. It can be as simple as saving receipts in a shoebox, or more complex like creating folders or spreadsheets. It’s always a good idea to save tax-related receipts and records. Keeping good records now will save time and help you file a complete and accurate tax return next year.

The IRS is absolutely right here…except about the shoebox. Please don’t send me a shoebox (unless you want your bill to go up a lot). If you document, document, and document, you’ll be in great shape not only to prepare your returns but in case your return is audited.

The IRS then suggested making charitable contributions.

If you plan to give to charity, consider donating before the year ends. That way you can claim your contribution as an itemized deduction for 2013. This includes donations you charge to a credit card by Dec. 31, even if you don’t pay the bill until 2014. A gift by check also counts for 2013 as long as you mail it in December. Remember that you must give to a qualified charity to claim a tax deduction. Use the IRS Select Check tool at IRS.gov to see if an organization is qualified.

Contributions are only deductible if made to a 501(c)(3) organization. I’m on the Board of a tax-exempt organization but we’re not a charity (it’s a 501(c)(7)). The IRS tool is handy. As the IRS notes, save your receipts; you need to have a written record for all donations of money to get the deduction.

The IRS last notes that contributing to retirement accounts is a good idea.

I agree: You need to contribute to your 401(k) or similar retirement plan by Dec. 31 to count for 2013. On the other hand, you have until April 15, 2014, to set up a new IRA or add money to an existing IRA and still have it count for 2013.

If you’re self-employed, you have even longer to start and contribute to a SEP IRA: the latter of April 15, 2014 or your timely filed return including extensions.

Once the clock turns to 2014 (and that’s in two weeks!), there isn’t much left that you can do that will impact your 2013 tax returns. So if you are thinking about making a charitable donation or starting a system to keep track of your expenses, now is a good time to act.

Tags: Year-End

This entry was posted on Tuesday, December 17th, 2013 at 8:08 pm and is filed under IRS. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.