Money and Tax Saving Tips for the holiday season
With the holiday season upon us, it is difficult not to get caught up in all of the hustle and bustle. Going out to dinner, shopping for gifts, and festive activities can all add up to a hefty amount by the end of the season. To help maximize your holiday experience but minimize expenses, we’ve compiled some tips to help you save....
Make a Budget
It is important to be prepared going into the holiday season. Knowing exactly how much you have to spend will help you allocate your funds appropriately. Once you have your budget, you should make a list before going shopping. Having exactly whom you have to buy for and how much you have to spend on them will help prevent impulse buys that you do not need.
Cash over Credit
If you carry only enough cash to cover what you plan on spending, you will be able to stick more easily to your holiday budget. A study by Dun and Bradstreet found that people spend 12-18% more when using credit cards rather than paying in cash.
Paying by credit card often distances the buyer from the idea of spending money, whereas cash purchases are more real by the action of physically handing over bills. If you limit the amount of cash you carry, you will limit your spending.
Track Your Expenses
Whether it’s gifts or groceries, keep track of your expenses. Tracking exactly what you spend will make it much easier to stick to your budget. You will easily be able to see how much you spent and how much you have left. Consider an expense tracking app for your phone to maximize convenience. Many free apps are available, including such apps as “Gift It.”
Many stores advertise special holiday sale prices. However, try and make sure you are getting the lowest price option. There are many free apps you can download to scan barcodes to compare prices from various websites and stores.
Additionally, take advantage of the price match program that many stores now offer to price check items that competitors sell at a lower price to guarantee the lowest possible price.
Christmas is the season of giving after all and what better way to spread holiday cheer than through donating to charity? Not only is this is a charitable deed, but your tax bill can also benefit from it.
Donations made to qualified charities by December 31 can be deducted from your 2015 tax bill. A qualified charity includes 501© organizations. Both monetary and material donations can count towards charitable contributions and be deducted as long as proper documentation and receipts are kept.
Holiday Gift and Meal Write Offs
If you are a business owner and purchase a holiday meal for an employee or client, you can take a 100% tax deduction on this expense.
In addition, if you purchase a small holiday gift for an employee or client you can also deduct 100% of this expense. However, it is important not to take advantage of this deduction. The meal or gift must qualify as specifically holiday related.
End of the year bonuses can have a significant impact on both the employer and the employee. If you own a business and award bonuses during the holiday season, you are increasing your expenses and thus decreasing your taxable income. Sometimes, this deduction from income can even push you into a lower tax bracket, minimizing overall taxes.
On the employee side, a bonus during holiday season means extra money in your wallet. However, more income means more taxes, so it may be worth while asking your employer to defer the payment of your bonus until January to delay the payment of the tax until the new tax year.
Need advise on your finances, or on minimising your taxes as we approach the end of the 2015 tax year? We can help! Contact Bambridge Tax Services today to have a chat with one of our trained advisors.