Last-minute ways to trim taxes

This time of year is when one typically has less time to spare on mundane financial bookkeeping tasks. But if one can dedicate a few minutes to review benefits and tax paperwork, he or she might be able to shave hundreds – or even thousands – of dollars off 2012 taxes.

Here are a few suggestions:

If not 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 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.

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.)

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

Jason Alderman directs Visa’s financial education programs.