It’s Time For Year-end Tax Planning

Although most Kentuckians don’t have to file their 2013 tax returns until April 15, 2014, now is the time to make year-end adjustments that could reduce tax liability. Here are a few simple ways.

RETIREMENT CONTRIBUTIONS Set aside additional funds in your retirement account on a pretax basis. Depending on your income, you might be able to deduct all or some of your contribution. If you’re tight on year-end cash, you can still contribute to your IRA for the 2013 year until April 15, 2014.

DEBT PAYMENTS If you are able to deduct interest on a student loan or home mortgage loan, consider making an additional year-end payment or accelerating your scheduled January payment to the end of 2013. An additional payment will mean additional interest paid, thus a larger deduction.

CHARITABLE DONATIONS In the spirit of the season, many taxpayers give generously to nonprofit organizations. Save your receipts; you may be able to deduct these charitable contributions to reduce your tax burden.

EXTRA INCOME If you think your tax rate will be lower next year, consider pushing a year-end bonus or other earned income to January 2014.

SARA PEAK is a freelance writer with expertise in finance and wealth management.