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Be tax-smart

Year-round tax planning can pay off in significant savings when you file your return in April.Year-round tax planning can pay off in significant savings when you file your return in April.


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Conventional wisdom holds that springtime is tax season, but effective tax planning is a year-round activity. It's never too early to take steps to minimize your tax bill and keep more of what you earn. Consider these tax-saving tips and strategies:

Max out your retirement contributions.

One of the smartest ways to reduce your tax bill is by socking away the maximum allowable amount, including catch-up contributions, in your tax-deferred retirement accounts. Not only will the earnings on your money grow tax-deferred, contributions may be deductible. It's a good idea to review the maximum contribution limits, restrictions and laws governing retirement accounts annually to ensure you are getting the most benefits from your savings.

Delay your bonus.

Expecting a year-end bonus? Find out if it can be postponed until after January 1. If you're self-employed, time your billings to ensure that you won't receive payment until the new year. The benefit: You won't be taxed on the income until the following year. Keep in mind, however, that this strategy will pay off only if you're not in a higher tax bracket in the year you receive payment. If you have questions, consult your tax advisor for guidance and information.

Beat the "2 percent floor."

Some expenses are deductible only if they exceed 2 percent of your Adjusted Gross Income (AGI)-but others carry no such stipulation. For instance, you may be able to claim all or part of the interest you pay on student loans, alimony payments, and moving expenses if you relocate to a new job at least 50 miles farther from your home than your current job.

Deduct your premiums.

If you pay any part of your employer-sponsored healthcare premiums with after-tax money, you may be able to deduct a percentage of the cost in excess of your adjusted gross income. If you’re self-employed and not eligible to be covered by a spouse’s employer-sponsored health plan, the threshold is waived.

Accelerate payments.

If you have a state or property tax bill, mortgage payment or medical bill due in January, it may make sense to write and mail the check before the Times Square ball drops on New Year's Eve. By doing so, you may be able to take a current-year deduction-but verify this first with your accountant or tax advisor.

Don't give only cash to charity.

We're not suggesting that you stifle your generosity-but there are more tax-advantaged ways to express it. By giving appreciated shares, bonds, mutual funds or property that you've owned for at least one year, you can deduct their current market value as well as avoid paying capital gains tax.

Set up a custodial account.

A CIT Bank custodial account lets you save money and manage it for a minor under the age of 21. All CIT Bank savings and CD accounts can be set up as custodial accounts. A custodial account can be used to fund a child's education, among other things to benefit the child, and some of the earnings on the money may be exempt from federal income tax.

Nail those hidden deductions.

There is a wide range of deductions that often escape the notice of even the most tax-savvy individuals. Depending on your adjusted gross income and other circumstances, the following are examples of expenses that may be partially or fully deductible:

  • Fees paid to an investment advisor
  • Mortgage refinancing fees
  • Babysitting, daycare, and nursery school
  • Travel to and from charity events

Be not just smart, but tax-smart

While taxes are inevitable, you can influence the amount of tax you'll have to pay. Above are a few examples of some tax-saving opportunities. For specific guidance and information, please consult your tax advisor. But don't wait until the end of the year to get organized. Early planning is key.


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