YEAR END TAX STRATEGIES
1. PREPAY PROPERTY OR ESTIMATED STATE INCOME TAXES DUE IN EARLY 2011. Pay before December 31, and you can deduct the expense on your 2010 tax return. Taxpayers that take the standard deduction are allowed to deduct state and property taxes - up to $1,000 if they file jointly, and $500 for single filers.
2. TAKE CAPITAL LOSSES. Sell a losing investment before year end and you can use the loss to offset capital gains realized this year. If you have more losses than gains, you can use up to $3,000 in losses to offset other income.
3. MAXIMIZE WORKPLACE RETIREMENT PLAN CONTRIBUTIONS. You can contribute up to $16,500 to a 401(k) plan in 2010 if you're younger than age 50 and $22,000 if you're 50 or older.
4. FUND A DEDUCTIBLE IRA. In 2010, you can contribute up to $5,000 to an IRA if you're younger than age 50, or up to $6,000 if you're age 50 or older. IRA contributions are tax deductible if you don't qualify for a workplace plan or, if you do qualify and you are a single taxpayer with adjusted gross income(AGI) of less than $65,000 or you are married filing jointly and your combined AGI is less than $109,000.
5. DONATE TO A CHARITY. There is still time to make charitable contributions and deduct them in 2010. The donation must be to a "qualifying organization" which generally includes churches and other religious organizations. Taxpayers must have written proof of all charitable contributions.
6. ADJUST WITHHOLDING OR ESTIMATED TAX PAYMENTS. if you received a large tax refund, you probably have too much of your salary withheld(or if you're self employed you made larger than necessary estimated payments). Rather than waiting until next spring to get your money back, reduce your withholding(or estimates) and use the extra money to increase your retirement plan contributions.
7. Business owners that report on a cash basis can shift income and expenses between 2010 and 2011.
8. Business owners should consider putting assets in use by Dec. 31. Bonus depreciation can be taken for 2010, so 50% of an assets cost is deducted right away. The other half is recovered via regular depreciation.
9. 2010 is a good year to buy a Business Vehicle. The maximum write-off for cars in the first year is $11,060. That will fall to around $3,000 after Dec. 31.