Have you started your tax planning?
If you wait until the preparation of your tax return to start thinking about tax planning, you are missing some of your best opportunities to save money.
to really make a difference on your refund or how much you owe for 2013, start thinking about taxes before the end of the year.
Take a look at these tax planning strategies and see which ones can help:
1. Pay your child
If you have a business in a way that you can legitimately reduce your tax bill is to pay your children to work in the company.
Your children learn the value of working and earning money, and they usually pay less income tax than you would, because they are probably in a bracket tax income much lower.
If you use your child in your unincorporated business, you have to pay or withhold FICA taxes (Social Security and Medicare) on your child as long as the child is old 18
If you pay your children for domestic work (household chores), you do not have to pay or withhold FICA tax as long as he or she is under the age 21.
you do not have to pay FUTA, federal unemployment tax, in both cases as long as your child is age 21
you do not have to worry about the "kiddie tax" when you pay your children to work. The kiddie tax does not apply to earned income.
Make sure your children can actually do the job they are paid for, and the amount you pay is reasonable.
You can usually only deduct payments to your children to work in your business, and you must actually make the payments.
2. Making money and non-monetary contributions by December 31
If you have kids, you probably have a constant supply of oversized clothes and forgotten toys . Get a fresh start for the new year - and a big tax deduction - for the transport to a charitable thrift store
Do not forget to ask for a receipt, and take notes about what you did donation
If you give something of value over $ 250, you will need a statement from the charity describing the item (but not evaluated) and if you received anything of value in return for the contribution.
TaxACT Donation Assistant can help you maximize your deduction for non-monetary donations.
If you make cash contributions to your favorite charities, including your children's organizations can be involved in, consider strengthening up to the end of
you will contribute anyway -.? why not write a check or make a contribution to your credit card before December 31
3. Consider giving some great gifts to children before the end of
If you want to give a great gift to your children - more than $ 14,000 (in 2013) - consider the gift spread over two or more years to avoid having to file a tax return on donations.
For example, say you want to give your daughter $ 20,000 to use as a down payment on a house.
If you give it all at once, you must file a tax return on the gift. If you give him $ 10,000 in December, and another $ 10,000 in January, you are below the limit for two years.
4. Make sure you know who claims the child as a dependent for the year
The parent living with the child for more than half of the year is allowed to claim the dependency exemption for the year on his tax return, unless the custodial parent waives the right to take the dependence to the other parent.
In addition, if you provide a home for at least one dependent more than half of the year, you can file as head of household rather than alone. You will generally pay less tax filing as head of household.
What kind of work would you be willing to pay your kids to do?
Photo credit: Mukumbura via photopin cc
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