Any legitimate charitable donation made before Dec. 31 is a deduction for this year. Always get a receipt. At the very least you should have a bank record or written communication from the charity acknowledging your donation, with the name of the organization, date and amount of the contribution. I’m not a big fan of running up credit cards. But, if you charge your donation on a credit card, it is a valid deduction for this year, as long as it is made before Dec. 31, even if you don't pay the bill until next year.
Sell Losing Investments
Wall Street has not exactly delivered big gains in recent years. But, you have to actually sustain a loss by selling the investment to write it off. Selling a sputtering stock and locking in the tax break is sound tax strategy. The loss is generally first offset against any gains. Then any excess losses can be deducted against ordinary income up to $3,000, $1,500 if married and filing separately. Any amount over that can be carried over to the following year’s tax return. This tax law is explained in IRS Publication 544, available online.
You can pay some of next year’s bills before Dec. 31 and get the advantage on this year's tax return. For example, homeowners can pay January’s mortgage now, getting the January interest deduction on this year’s return. Large medical bills, like braces or uncovered prescriptions, might be paid before Dec. 31. IRS code allows families to itemize and deduct uninsured medical or dental expenses that exceed 7.5 percent of their adjusted gross income.
Job Search Expenses
If you looked for a new job in the field that you’re now in you may deduct expenses you incurred such as resume preparation, career counseling, travel, postage and phone calls made in the job hunt. Get the resume printed and buy the professional stationery now.
Now is the time to buy equipment for your business that you might have been thinking about. Note that the equipment must be new and the deduction cannot put your business in the red if you want to take advantage of recent increases in what you can deduct in this area.
LLC or Corporation setup
If you’ve been operating a business and thinking about setting up an LLC or Corporation, do it now. Filing fees and legal costs are deductible business expenses. Don’t forget stationery, business cards and other items announcing your LLC or Corporate name, its deductible.