Dobbins Air Reserve Base, Ga. -- Editor's Note: Mr. Kevin Startt is Dobbins Air Reserve Base's Personal Financial Counselor.
December Financial Tips
1. Utilize the “Filing for Freedom" program if you are an enlisted member in the ranks of E-1 through E-9. This no-cost benefit sponsored by the IRS, allows your income taxes to be done by a professional Certified Public Accountant or equivalent during a UTA weekend from February through April. The benefit of a CPA doing your taxes is that a CPA can represent you in tax court if you are audited. You can also opt to use Military One Source for tax help other than filing, or use IRS Tax Slayer's “Free File” if your annual income is $73,000 or less.
2. Utilize the IRS free service “W-4 qualifier” on the IRS website to ensure that adequate income withholding is being deducted from your paycheck. The IRS penalty is 8% for under-witholding and is worth avoiding.
3. Decide early in the year whether to itemize your taxes or take a standard deduction. The standard deduction for 2023 is $27,700 for joint filers and $13,850 for Single taxpayers. Only 10% of taxpayers itemize, but if you have a small business on the side or considerable mortgage interest on a home, itemization may be worth considering. Considerable gifting is also worth a look when considering whether to itemizing for 2022.
4. If you itemize your taxes and claim a higher income tax state like New York or California, your benefit is capped at $10,000. However, up to that amount a high tax state provides a bigger deduction.
5. If you are considering an electrical vehicle purchase, now might be the right time. A limited $7,500 deduction applies to electric vehicle purchases for next year. If you do choose to purchase an electric vehicle this year you will have to wait until 2024 to take the deduction.
As always, remember to consult a tax professional with any specific questions or concerns prior to filing your taxes.