Reminders for fourth quarter tax planning:
Know your tax rate: While ordinary federal income tax rates for 2013 will remain the same, the fiscal cliff legislation passed earlier this year affects higher-income individuals and puts them in the 39.6% tax bracket (up from 35%).
Consider leveraging itemized deductions by bunching deductible ex...penditures every other year, while taking the standard deduction in intervening years.
Consider deferring income if you expect to be in the same or lower tax bracket for 2014.
Consider the tax impact of selling appreciated securities by timing your investment gains and losses. Selling some loser securities before year end may also be a smart tax strategy.
Take advantage of the special tax breaks available to you if you make charitable contributions directly from your IRA; special rules apply.
Remember that significant lifestyle changes like divorce, a job change, retirement or becoming a home buyer affect your taxes.
Spend down flexible spending accounts before those balances expire.
Go green: Purchasing energy-efficient appliances can mean big tax credits.
Changes to IRS tax laws effective for 2013 - know which changes affect you:
Rules for home office deductions have changed. New this year is a simplified option for a maximum standard $1,500 deduction.
Rules for depreciation have changed.
Many refundable credits are disappearing.
A new 3.8% Medicare Investment Tax and a 0.9% Medicare Health Insurance Tax will affect many higher-income individuals due to recently enacted health care legislation.
Tax provisions expiring after 2013:
Above-the-line deduction for certain expenses of elementary and secondary school teachers.
Deduction for state and local sales taxes.
Above-the-line deduction for qualified tuition and related expenses.
Deduction for mortgage insurance as qualified interest.
Research and experimentation tax credit.
Work opportunity tax credit.
Increase in expensing to $500k/$2M and expansion of definition of $179 property.
15-year straight-line cost recovery for qualified leasehold, restaurant and retail improvements.