None of us want to pay more in taxes than we have to, but for many of us, thinking about taxes is not top of mind during the holiday season. However, if you take a few minutes to plan now, there are steps you can take before the end of the year that will save you money on taxes come spring.
“With tax laws continually evolving, we want to encourage Coloradans to assess their individual situation before the end of the year, talk to their advisors, and plan accordingly,” explains Madeline Sears, branch manager at Credit Union of Colorado in Fort Collins. “Thoughtful planning and organization is key to maximizing any potential savings.”
Contribute to tax-advantaged accounts
Contributions to 401(k), 403(b), and Health Savings Accounts can reduce your taxable income by thousands annually. Maximize your contributions as much as possible before the end of the year. Many employers offer matching contributions up to a certain level, so try to contribute enough to take advantage of that benefit if it’s offered.
Invest in 529 College Savings Plans
Investing in a 529 College Savings Plan is a good way for parents, grandparents, and other family members to set aside tax-free money for the education of children and grandchildren. Funds can be used for college expenses, for tuition and fees for children in grades K-12, and to repay student loans.
If you are planning to gift money to a friend or family member, you can give up to $17,000 per person by December 31 of this year without having to pay a gift tax. This is an increase from $16,000 in tax year 2022.
Check into tax credits
Various tax credits may be available, such as The American Opportunity Tax Credit for eligible students for their first four years of higher education or the Lifetime Learning Credit, which allows qualified students to claim a credit for qualified tuition and related expenses for undergraduate, graduate and professional degree courses – including courses to acquire or improve job skills.
Gather deductible expenses
Deductible expenses may include mortgage or home interest paid (Form 1098), real estate and personal property taxes paid, expenses associated with the purchase or sale of a residence, health care expenses,
charitable contributions, moving expenses, student loan interest, tuition and education fees, job-related education expenses, unreimbursed employment-related expenses, child care expenses, IRA contributions, income expenses from rentals or other business, and more.
The tax year 2023 has a higher standard duction of $13,850 for single filers and those married filing separately, $27,700 for married filing jointly, and $20,800 for heads of the household, so you may not need to itemize expenses.
Find tax help if needed
Visit irs.gov or speak with a qualified tax professional for guidance. Coordinated by the IRS, the Volunteer Income Assistance Program (VITA) provides in-person tax preparation by an IRS-certified volunteer at no charge for those who qualify — typically people who make less than $60,000 a year, those with disabilities, people who speak limited English, or others who need assistance. Check out the options available in your state with the Free Tax Prep Help locator to see if you qualify for the program.
Credit Union of Colorado in your community
Founded in 1934, Credit Union of Colorado is one of the largest credit unions in the state and is deeply connected to the communities where its members live and work. The credit union’s “here to help” culture is demonstrated by its strong support of local communities through financial donations, promotional sponsorships, and employee volunteerism. Credit Union of Colorado offers the latest in banking with 19 full-service locations throughout the state featuring lobby service centers, safe deposit boxes, drive-up tellers, and surcharge-free, drive-up ATMs. The credit union also provides its members with the convenience of digital banking with remote check deposit and access to Zelle®, a fast, safe and easy way to send money right from your mobile banking app or online banking account.
With more than 85 years of experience, the Credit Union of Colorado is a stable, member-owned financial institution with more than $2 billion in assets serving more than 160,000 members. The Credit Union of Colorado Foundation supports education and emergency human services programs through college scholarships and grants to nonprofit organizations.
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