The holiday decorations aren’t up yet, and the Christmas carols haven’t hit the radio yet. That would really be rushing the season. But there’s one place where it pays to do your shopping early if you want to save money: Taxes! There are a few steps you can take now before the holiday rush to reduce your tax bill.

Increase Retirement Plan Contributions 

Have the HR department take a little bit more out of your paycheck to increase your tax-deductible contribution to the 40l(k) or 403(b) plan. Unlike an IRA, you must make this year’s contributions before year-end. And the limits are generous: $17,500 if you’re under age 50, and $23,000 at age 50 or older. But even if you can’t contribute the max, every little bit will grow tax deferred.

If your company gives you a matching contribution, you get a double benefit — tax deduction and “free money.” You can’t afford to miss out on that deal. And though it sounds painful, you’ll get by without those extra few dollars in your paycheck.

Use Flex Spending — Save HSA Account 

There are two different kinds of health care savings accounts. The Flex Spending account must be spent before yearend. Don’t wait until the last minute to consider appropriate purchases. Schedule eye exams or dental procedures now, before the holiday crunch. This is use-it-or-lose-it money, so be sure to take advantage of any opportunities. For a list of approved spending items, go to IRS Publication 502 online.

But if you have a health savings account, it can roll over for future use. Although you do want to schedule regular preventive care, there’s no rush to use this money as it will grow tax-deferred to be used for some future medical expense.

Open Enrollment for Health Care Plans 

Even if you already are enrolled in an individual health care plan for 2014, it may pay to check out the features of other plans, and their costs, for 2015. Yes, you’ll have to navigate again! But this year should be less confusing. Remember that open enrollment starts on Nov. 15, and ends on Dec. 31. Be sure to avoid this last-minute crunch.

Other Healthcare Deadlines 

Seniors should check on new deals being offered on Medicare Part D. Even if you take the same drugs, or don’t take any drugs at all, you must have Part D coverage. Many plans have changed their pricing or their formularies. The best way to find out is to go to and click on the plan finder tool. 

And you might also want to check on the best Medicare supplement plan — or enroll in Medicare Advantage. You’ll be surprised at how much money you might be able to save by considering other supplement plans. You can compare Medigap supplements at the website. Or if you’d like some handholding and advice, go to and they will help you find both a supplement and a Part D prescription drug program to fit your needs.

Consider Charitable Contributions 

Pretty soon the bells will be ringing on the Salvation Army kettles. But if you make larger donations, it pays to get a receipt so you can deduct the amounts from your income. Start now to think about worthy causes. Make a list so your generous impulses don’t overwhelm your budget. 

Check out charities on to make sure they are legitimate, and have a reasonable expense ratio. Or create your own charitable “foundation” by setting up an account at a charitable gift fund offered by Fidelity or Vanguard or many others. You get an immediate deduction for your contribution, and the money grows tax-free until you issue instructions to distribute it to recognized charities.

In past years, seniors could direct contributions from their IRA accounts, avoiding taxation on those amounts — but including these charitable contributions in their required minimum distributions for the year. Congress hasn’t extended that break to 2014, although last yearend they did it at the last minute. So proceed cautiously. 

Capital Gains 

These tax rates on the sale of appreciated stock or assets are about half the tax rate on ordinary income. With the stock market still near its highs, you might have a chance to benefit from this tax deal if you’ve held stocks for the required 12-month period. Then again, if the market falls, it might be better to take the gains and run! Consult your investment advisor AND your tax advisor to make sure the sale of an asset doesn’t move you into a higher bracket, or impact some benefits, such as the monthly Medicare premium you pay, which is based on your income level.

Maximize Deductions 

If you “bunch” some deductions in the same year, such as paying 2015 professional fees and dues in advance, you might reach the threshold for creating a larger deduction (2 percent of AGI). But before applying this and similar strategies, consider the Alternative Minimum Tax, which might be triggered by too many deductions!

Who said life was simple when it comes to yearend money management? But making a few smart moves now could make you a lot happier next April when you have to file your tax returns. And that’s The Savage Truth.

Terry Savage is a registered investment adviser and is on the board of the Chicago Mercantile Exchange. She appears weekly on WMAQ-Channel 5’s 4:30 p.m. newscast, and can be reached at She is the author of the new book, “The New Savage Number: How Much Money Do You Really Need to Retire?”