Tax-saving strategies for next year take on extra importance when you see how much you are paying as you prepare your 2003 income taxes to meet the April 15 deadline.
Below are five tax-cutting strategies to consider to help reduce your federal tax burden. More information can be obtained from TIAA-CREF at http://www.tiaa-cref.org or by calling 1-800-842-2776.
• Use tax-deferred retirement plans. Participate as fully as you can in the WSU employer-sponsored retirement plan and/or supplemental retirement plan. The key is to get started with as little as $15 per pay period and then increase it whenever you can.
If you meet certain income requirements, a classic IRA can help you invest for retirement on a tax-deferred basis. You can contribute up to $3,000 (or $3,500 for investors age 50 and over) for the 2003 tax year, if you do so by April 15.
• Reduce adjusted gross income (AGI) . Some ideas include using the Hope Scholarship and Lifetime Learning Credits, the student loan deduction and the adoption credit.
Another idea is to participate in the WSU sponsored flexible spending account for medical expenses. Open enrollment in November will be effective beginning January 2005.
• Maximize your deductions. If you take the time to itemize deductions you may save money. Itemized deductions include home mortgage interest, local taxes (also state taxes if you reside in Idaho), unreimbursed employee business expenses and many more.
• Let charity work for you. If you contribute to your church or charities through the WSU fund or outside work, you can deduct this from your AGI, as well as help various organizations. You’ll get a bigger tax deduction if you donate appreciated assets such as stocks and bonds instead of sending a check. In addition to receiving a charitable deduction for the current market value of your shares, you’ll avoid owing capital gains tax on the appreciated value.
• Save for college. If you are saving for your children’s future college costs, you can do so while reducing taxes by investing in a Section 529 college savings plan. This is particularly helpful to those WSU employees who reside in Idaho, as there is an additional savings for them due to deducting all or part of the contribution from state taxes.
On a related note, remember the free TIAA-CREF educational seminar at 1-4 p.m. Monday, April 12, in CUB 127.
