How to get most out of your money before end of year, tax season

What you need to know before year ends

SAN ANTONIO – It's almost the end of the year and though we often don't think about taxes until the spring, there are things you should have in mind now to save the most on your return.

Minimizing your taxable income 

Less income equals less taxes and there are ways to jump down to a lower bracket or not have your money taxed at all.

Especially if you are retiring soon, maximize your contributions to your 401(k).

In most cases, the maximum you can put in each year is $18,000 plus an extra $6,000 if you are age 50 or over.

That money isn't taxed for now, and so can earn more in interest than investing your regular income after-tax. 

Also, you can consider investing un-needed savings or even your holiday bonus to put the money to work.

Donate

Most people donate to at least one charity around the holidays.

Not only are you helping the community, the donations aren't considered a part of your taxable income.

However, you need to make sure how much you can donate and claim, and if who you're giving to counts.

"Now is a time maybe, (to) go clean out your closets, make contributions to a qualified nonprofit, keep those receipts, and the most important thing is the qualified, so you do wanna' go to the IRS website, and make sure you check that, that the nonprofit you are going to, making contribution, is a qualified one," said H and R Block senior tax analyst Marilyn Ager.

If it's not qualified, you still did a good deed but just can't claim the money.

As for what you can donate, it runs the gamut.

Money, clothes, old kids toys and maybe even that clunker sitting in your driveway.

You can even donate stocks or securities that have made money to avoid paying taxes on them.

Remember, if you want it to count for 2017 though, you have to donate by Dec. 31.

FSAs

FSAs are an account you make pretax contributions to throughout the year in order to cover out-of-pocket medical expenses.

Most of the time it's offered through work.

Common uses are copays or deductibles on doctor's visits or prescriptions, but often even extend to products like Band-Aids.

Income isn't taxed before it goes into the FSA, so your paycheck has more buying power when it comes to these expenses.

But here's the catch, if you don't use it all by Dec. 31, what you put in could  betaken away depending on your plan.

"Set up your doctor appointments, order those refills on your prescriptions, and if you got eye glasses or contacts, order those because it is use it or lose it," said Ager.

Products that are FSA eligible will be marked as such on receipts.

Before purchasing, you can also ask the pharmacist whether an item is covered or not.

Life events 

Did you get married? Is your child going to college now? Are you suddenly taking care of an elderly parent?

These are big changes in your life, and the effects percolate to your taxes as well, mostly in the form of deductions to lower your tax bill.

As long as it happened in 2017, it counts.

"If your child is born at 11:59 p.m., on Dec. 31, you can write your child, you can claim them as your dependent, cause they were, uh, technically born, in 2017," said Ager.

Think of it as a New Year's Eve gift.

Tax Code Overhaul

Congress just passed the most substantial tax code overhaul in decades, and your tax situation may be completely different than in prior years. Tax professionals are getting trained right now in the new law.

"It's important to talk to your tax professional because it could affect your tax return and your tax liability, so, your tax professional will be able to tell you, the new tax laws, how to affect your bottom line on your taxes, if you got a refund, or if you're gonna,' You know, pay taxes," said Ager.


About the Authors: