Budgeting - Ways To Reduce Your Taxes

Here are some tips on ways of reducing your income taxes:

1. You can send in next January's mortgage payment early: If you make your mortgage payment in the current tax year, you will be able to deduct the interest this year.
2. You should make an extra payment or two on your student loans if you have any: This will allow you to take the deduction on your taxes for that year.
3. If you can pay your state taxes before December 31st if you have any to pay: You can deduct them in the current tax year.
4. You should pay your doctor and dental bills: You can then use these payments to increase your medical expense deduction that year.
5. You should sell loser stocks that you have.  Sell your worthless or near-worthless stock before the end of the year so that you can use the loses to offset any capital gains you might have made this year.  If your loses exceed your earnings, you can deduct up to $3,000 of your losses from your ordinary taxable income.
6. If your Roth IRA was a bust close it out.  You can close the account and take the loss as a miscellaneous deduction.
7. You should not buy mutual funds in November or December.  Mutual funds make dividend and capital gain distributions most often during the last eight weeks of the year.  If you buy a mutual fund at this time, you will have to pay taxes for a fund you owned for just a few weeks.

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