LAS VEGAS - The impending fiscal cliff may affect your 2012 return as well as your 2013 taxes. 8 on Your Side looks at steps you can take now to lessen your tax burden.
Because of the pending fiscal cliff, you could pay a lot more in taxes this year, and you only have four days to take advantage of steps to save yourself some money.
About 30 million people could see their taxes increase for 2012 because of the fiscal cliff. Approximately 100 million could see their refund delayed. This is all because of the alternative minimum tax.
Most people don't pay the alternative minimum tax because of an exemption that is usually adjusted for inflation by Congress. So far, Congress has not made that adjustment, and there is no indication Congressional leaders will anytime soon. As a result, some say a household making $45,000 a year could see their taxes go up as much as $4,000.
There are steps you can take to relieve your tax burden. First, look into the Mortgage Forgiveness Debt Relief Exclusion. It is going to expire this year. If you've foreclosed or short sold your home, that loss is not taxable income with this exclusion. If you can finalize your short sale or foreclosure in the next couple of days, it will work to your benefit.
Also, take advantage of the Mortgage Interest Reduction Tax Credit. It's one of the biggest deductions you can take. If you mail your January payment early, you can roll that into it as well.
You can also take advantage of all expiring tax credits. If you're paying tuition, you may qualify for up to $2,500 thanks to the American Opportunity Tax Credit.
Charitable deductions are a good way to save money, but make sure all your deductions exceed the standard deduction which is $5,950 dollars for singles and $11,900 for a joint return.
Money qualifies as a charitable donation, as long as your check is documented with a receipt. You can also donate clothing or other items. Make sure you have a detailed receipt that includes the value of each item donated. All charitable donations have to be done by December 31st.
Finally, if you have a flexible spending account through your employer, find out if it can be rolled over into the new year. If not, you will want to use it or you could lose it.