Its almost tax time again this year, a frightening period for many people. How can you make the most out of your tax return this year?
Here are some techniques that may save you some anguish and money when dealing with 2012 tax rates.
1. Be willing to part with some of your possessions. Tax expert Joseph Thorndike says gift and estates taxes are the lowest they have been in a long time. This is the perfect time to set up a trust for any relatives, or to hand over the reins on a family business.
2. If you are making money from a hobby, turn it into a business. If you make over 20k with more than 200 financial transactions, you will get a 1099-k. If you count is a business, you are allowed superior deductions.
3. Pay your deductions early. There’s a chance that the limits on itemized deductions are going to be lowered in the next few years. If you can pay real estate taxes ahead of time you could end up saving some substantial money.
4. Use the benefits of the zero percent capital gains tax. It can be used up until 2012 if you are in a lower income tax bracket. If you declare your investment gains now, rather than later, you will be paying less.
5. If you are selling anything major like a business or real estate, or other major asset, see if the buyer can pay in full. This way you will end up paying less on capital gains tax. If you have to, try and negotiate a lower rate with your buyer, or to pay the cost of refinancing. It will shrink your short term profit, but you will be be making more overall.
- Make the Best of Your Small Business Tax Deductions (2011taxes.org)
- Top Ten Most Overlooked Tax Deductions (2009taxes.org)