Medical and dental expenses, for example, cannot be deducted unless they exceed 10% of AGI. The 7.5% AGI threshold still applies to taxpayers age 65 or older through 2016. Miscellaneous expenses, which include business expense claims, must be more than 2% of AGI for filers of all ages.
To get over these deduction hurdles, start consolidating eligible expenses now. This strategy, known as bunching deductions, will push them into one tax year where you can make maximum tax use of them. The sooner you start this process, the better. It's much easier to plan your costs now than scramble to come up with eligible expenditures as December days fade.
7. Add to or open an IRA
Remember that added money you put in your 401(k) to lower your taxable income? Bulk up your retirement planning even more by contributing to an individual retirement account.
If you have an IRA account or open a traditional IRA, you might be able to deduct at least some of your contributions on your tax return. If you don't make a lot of money, your contribution also could be used to claim the retirement savings contributions credit.
Even if you won't get a deduction, you'll be adding to your nest egg so that you can retire on your terms. And while it's true you can wait until the April 15 filing deadline to contribute for the previous tax year, the sooner you put money into an IRA, traditional or Roth, the sooner it can start earning more for your golden years.
Self-employed workers also get an added retirement saving benefit. There are a variety of plans -- SEP IRAs, Keoghs, solo 401(k) plans -- into which you can put some of your self-employment earnings. If you're a sole proprietor, your contribution to a self-employed retirement plan also is deductible on your tax return.
8. Be generous to charities
As you're putting together your holiday shopping list, be sure to include charitable gifts that could help reduce your tax bill. In addition to the usual dollar donations or household goods and clothing, consider some less traditional ways to give to charities.
Many groups will accept vehicles, with some even making arrangements to pick up the jalopies.
Donate stock or mutual funds that you've held for more than a year but that no longer fit your investment goals. The charity gets the asset to hold or sell, and your portfolio rebalancing nets you a deduction for the asset's value at the time of gifting. Even better, you don't have to worry about capital gains taxes on the appreciation of your gift.
9. Pay college costs early
The spring semester's bill isn't due until January, but it might be worthwhile to pay it before year's end. By doing so, you can claim the American Opportunity Tax Credit on this year's tax return.
The American Opportunity credit replaced the Hope tax credit in 2009 and is in effect through the 2017 tax year. It's worth up to $2,500 with up to 40% of the new credit refundable. That means you could get as much as $1,000 back as a tax refund even if you don't owe any taxes.
Tuition, fees and course materials for 4 years of undergraduate studies are eligible expenses under the American Opportunity credit. This includes education expenses made during the current tax year, as well as expenses paid toward classes that begin in the first 3 months of the next year.
10. Check your health insurance
If you and your family don't have adequate medical coverage, referred to as "minimum essential coverage," you may be subject to a penalty that's collected when you file your return, says Robin Tuttle Christian, CPA and senior manager of Checkpoint PPC products with the Tax and Accounting business of Thomson Reuters.
If you don't have sufficient insurance, says Christian, the penalty amount varies based on the number of uninsured members of your household and your household income. For the 2015 tax year, 3 or more uninsured household members could produce a penalty of $975 or more, depending on your household income, says Christian.
You'll owe the fee for any month you, your spouse or your tax dependents don't have qualifying health coverage. If that's your situation, check into coverage now to reduce your penalty charges. Medical coverage provided by your employer or through an individual plan purchased through a state insurance marketplace generally qualifies for adequate coverage.