If you sold a stock at a profit in 2013, you'll pay the price come tax time. But, if you incurred a loss from a stock or mutual fund, you might consider selling before December 31st.
"Because if you sell those stocks at losses, that will offset your gains and will bring down your capital gains which in turn brings down your Adjusted Gross Income," said Michael Eisenberg of CPA.
This year could be even more taxing for millions of Americans due to the Affordable Care Act.
That act led lawmakers to approve a new Medicare tax of 3.8 percent that applies to passive or unearned income like interest, dividends, rents, and capital gains. Now, that's in addition to your normal tax burden.
It applies to individuals making more than $200,000 in adjusted gross income or AGI and to married couples making more than $250,000 The AGI is your income before itemized deductions.
This summer's landmark Supreme Court ruling that cleared the way for same-sex marriages in California could put those couples into a higher tax bracket and require them to pay the Medicare tax for the first time.
Because taxes are going up, you'll want to take steps now to avoid paying even more to the IRS by April 15.
One way to lower your Adjusted Gross Income is maximizing your contribution to a 401(k) or IRA.
For individuals putting money in a 401(k), that's $17,500, plus an extra $5,500 or $23,000 total if you're over 50. You can increase your contributions right now to reach that limit.
Now, if you're over 70-and-a-half, you have to withdraw a minimum from retirement savings each year.
Eisenberg says if you don't do it by Dec. 31st, you'll pay the price.
"If you don't take it or if you don't take the appropriate amount, the amount you didn't take is subject to a 50 percent IRS penalty," said Eisenberg.
For example, if you're required to take out $6,000, and you only took out $4,000, you'll pay a 50 percent penalty on the $2,000 difference, costing you $1,000 in extra taxes.
If you donate cash or property to a charity by year's end, remember anything over $250 has to be documented. So make sure you get a receipt.
If you're a consultant or self-employed and think you might be in a lower tax bracket next year, you might be able to defer income until 2014 by sending out invoices at the end of this month so you won't be paid for your services until next year.
Some other year-end tax tips: make your January mortgage payment in December. Pre-pay your property taxes by the end of the year. And, pay college costs early to take advantage of the American Opportunity Tax Credit on next year's return.
Useful links:
Top 10 year-end tax moves to make via ABC News: http://abcnews.go.com
Internal Revenue Service 2013 tax tips: http://www.irs.gov
TurboTax top 8-year-end tax tips: https://turbotax.intuit.com
H&R year-end tax tips: http://www.hrblock.com
Charles Schwab year-end tax tips for 2013: http://www.schwab.com
Bankrate 10 year-end tax moves to make: http://www.bankrate.com
