- 1). Pay the January mortgage payment prior to Dec. 31st. Mortgage interest is deductible and paying the January mortgage payment a day early means that you'll be able to take that extra mortgage interest on your tax return, which further lowers tax.
- 2). Donate to charity. Every donation made, to a church, to the children's school or to any charity is tax deductible. Be sure to keep receipts for cash donations and assess the value of any clothing, appliance or furniture donations accurately. Some organizations will provide a receipt for donations other than cash.
- 3). Add up medical bills for the year. This includes insurance premiums and any unreimbursed expenses paid throughout the tax year. Keep in mind that medical expenses are only deductible if exceeding seven and a half percent of total income.
- 4). Contribute to a retirement plan. Individual Retirement Accounts (IRA) allow taxpayers to contribute to their IRAs out of pocket and consider any contributions tax-exempt. For example, if contributing $3,000 to an IRA during the tax year subtract that amount from income, which significantly lowers taxes.
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