Last-minute tax tips for 2012

Posted: Dec 19, 2012 6:32 PM by Keli Moore, KSBY News
Updated: Dec 20, 2012 6:21 AM

Last-minute tips to trim your taxes in 2012

The peak of the holidays is upon us, the turn of the New Year, and what could come with it is change to our pocketbooks as congress and President Obama negotiate tax laws.

But there are some last minute ways to trim your taxes and prepare for 2013.

"We could we be looking at higher tax rates next year, so normally we are looking at trying to decrease your taxes this year, but because next year they might be higher, you might want to put off some deductions until next year," said Cole Stevens, CPA at Burkhart & Associates in San Luis Obispo.

Deductions like making a donation to charity or buying an electric car.

"We have to plan for the worst, because we don't want people to get stuck," said Stevens.

Planning means asking questions. Should I convert a traditional IRA to a Roth IRA? Should I sell any appreciated stock or real estate before Dec. 31st to take advantage of low long-term capital gain tax rates?

"The capital gains rates are probably going to go up, so people who have stock and they have appreciated stock and they sell it this year are likely to take a lower tax hit this year then if they were to do it next year," said Stevens.

What should I consider maximizing my retirement fund?

"The easiest thing is to fund retirement plans at work," said Stevens. "Like a 401K."

If I'm a small business owner what should I prepare for?

"A lot of business owners have been use to getting what they call a section 179 depreciation where if someone buys equipment and then they get to deduct all the cost in that year instead of spreading it across many years. That is going down to $25,000 if they don't do anything," Stevens said.

If I'm a student what should I take into consideration?

"You probably want to purchase supplies if you can. Maybe even pay tuition now so you get the deductions in 2012," said Stevens

Stevens said child tax credits could also change in 2013.

"The credit is going to go down to $500 and most people are use to getting $1,000," he explained.

Of course this is one person's advice, for more answers talk to a certified public accountant.

If the so-called Bush tax cuts do expire on Jan. 1st, accountants said the rate will increase to 39.6 percent from the current rate of 35 percent.