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Practical Money Matters Last-Minute Ways To Trim Taxes
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From now until New Year’s is probably when you have the least amount of time to spare on mundane financial bookkeeping tasks. But if you can dedicate a few minutes to review your benefits and tax paperwork, you might be able to shave hundreds – or even thousands – of dollars off your 2012 taxes.

Here are a few suggestions:

 If you haven’t already maxed out on contributions, ask your employer if you can make a catch-up contribution to your 401(k), 403(b) or 457 plan before year’s end. Most people can contribute up to $17,000 in 2012 (a $500 increase over 2011), plus an additional $5,500 if they’re over 50.

If you contribute on a pretax basis, your taxable income is reduced, which in turn lowers your taxes. At a minimum, if your employer offers matching contributions (essentially, free money), be sure to contribute at least enough to take full advantage of the match.

 If you participate in employer-sponsored flexible spending accounts (FSAs), which let you use pretax dollars to pay for eligible healthcare and dependent care expenses, an important change is coming next year: Beginning January 1, 2013, the maximum annual contribution for healthcare FSAs will shrink to $2,500 from the $5,000 limit many employers currently offer; however, if your spouse has FSAs at work, you still may contribute up to $2,500 to each account. Dependent care account limits remain unchanged.

It’s vital to calculate and use any untapped 2012 account balances before your plan-year deadline (sometimes up to 75 days into the following year); otherwise, you’ll forfeit the remaining balance. If you have a surplus, consider which 2013 expenses you could pay before December 31, 2012. And, keep the new limit in mind when planning your 2013 healthcare FSA.

You can use your healthcare FSA for copayments, deductibles and medical devices such as glasses, contact lenses and braces, among other expenses; over-the-counter medicines are only eligible with a doctor’s prescription (an exception is made for insulin).

 Charitable contributions. If you plan to itemize deductions on your 2012 taxes, charitable contributions made to IRS-approved organizations by December 31, 2012, are generally tax-deductible. If you’ve got extra cash now and want to lower your 2012 taxes even further, consider moving up donations you would have made in 2013.

 Gifts. Unless Congress intervenes, the federal income tax exemption for estate distributions and lifetime gifts will drop from the 2012 limit ($5.12 million) to the pre-2011 level of $1 million (for married couples, it drops from $10.24 million to $2 million); in addition, the tax rate on gifts or estate distributions above those limits will increase from 35 percent in 2012 to 55 percent in 2013.

One way to exceed the lifetime gift limit – and avoid having to file a Gift Tax Return – is by giving separate, annual gifts of up to $13,000 per year, per person. (Married couples filing jointly can give $26,000 per recipient.) Rules for gift and estate taxes are complex, so read IRS Publication 950 (at and consult your financial advisor.

 This isn’t an ideal time to take on any additional tasks, but if some or all of these situations apply, you could considerably lower your tax bill – wouldn’t that be a great way to start the New Year?

 Jason Alderman directs Visa’s financial education programs. To Follow Jason Alderman on Twitter: