Hass Associates Accounting: 10 Money-Saving Tax Tips
NEW YORK (The Street) -- In the middle of January, it's too cold to have much fun across most of the U.S., so you may as well shrug your shoulders and dig into your 2013 tax returns.
This year that means knowing some key changes in the Internal Revenue Service tax codes. Straight from the IRS, here are some of the most important changes for Main Street Americans this tax season:
Tax brackets: The so-called "Bush tax cuts" are off the board, and taxpayers are looking at seven new tax brackets -- at 10%, 15%, 25%, 28%, 33%, 35% and 39.6%.
Standard deductions: Standard filing deductions rose to $12,200 for taxpayers married filing jointly; $8,950 for taxpayers filing as head of household; and $6,100 for single taxpayers.
New exemption levels: Congress has hiked the personal exemption amount to $3,900.
Estate taxes: There's now an estate tax rate at 40%, along with an estate tax exemption of $5.25 million.
Contributions to 401(k) plans: Workers can contribute up to $17,500 to their 401(k) plans.
IRA plans: Americans saving for retirement can contribute $5,500 to their individual retirement plans, or $6,500 for Americans age 50 and over.
Mileage deductions: According to the IRS, mileage rates for business and medical rose to $0.565 and $0.24 respectively. Note the mileage rate for charity mileage still stands at $0.14.
While it's important to know and leverage these changes to the tax code, your tax planning shouldn't end there. There are many moves you can make to lower your tax burden; keeping more money in your pocket and giving less to Uncle Sam come April 15.
The California Society of CPAs offers help via another list, this one detailing some common-sense but oft-overlooked tax savings tips. Here's a glimpse of what the society is calling your "new year financial checklist."
Weigh the possibility of any alternative minimum tax. The society advises Americans to calculate any potential AMT tax burden.
"The AMT parallels the regular income tax," says the association. "However, different rates apply, as do different definitions, deductions, exemptions and credits." The IRS offers a Web page devoted to calculating your AMT obligations, if any.
Boost your 401(k) payments. As noted above, Americans can contribute more to their 401(k) plans this year, and that means opportunity for retirement savers.
The society says that even contributing an extra $200 per month for 25 years can boost your account by $190,000, assuming your investments return 8% per year. "You'll only see $150 less in each paycheck if you're in the 25% bracket," the society says. "Plus, you could get free money if your employer matches your contributions. For example, a 50-cent-per-dollar match is like getting an extra 50% return on your money."
Get your tax records organized now. The society says January is the best month to organize your financial documents, especially now that the final bills for 2013 have rolled in. That saves time when you need it most. "You wouldn't want to miss out on valuable deductions because you're scrambling around at the last minute," the group says.