Everyone likes to avoid talk of taxes (and paying them!) but there are a few critical things all taxpayer should do before the end of the year to get their tax houses in order. In addition to make contributions to retirement funds, donating to charity, and paying property taxes, taxpayers should make sure their records are in order.
I appeared on CNBC's personal finance show On the Money this week to talk about some of those critical year-end tax moves that consumers should make:
Not everyone is required to file an income tax return each year. Generally, if your total income for the year doesn't exceed the standard deduction plus one exemption and you aren't a dependent to another taxpayer, then you don't need to file a federal tax return. The amount of income that you can earn before you are required to file a tax return also depends on the type of income, your age and your filing status.
The Internal Revenue Service (IRS) permits you to write off either your state and local income tax or sales taxes when itemizing your deductions. People who live in a state that does not impose income taxes often benefit most from this deduction. However, you might also be better off deducting sales taxes instead of income taxes if you make large purchases during the year and your total sales tax payments exceed those for state income tax. You can use either the actual sales taxes you paid or the IRS optional sales tax tables.