More TAX TIPS you may have overlooked
I am just a middle class taxpayer who does his own taxes.
I am not nor have I ever been a tax professional. If any of the tips that follow strike a chord please consider consulting with your personal Tax advisor.
1) If you have not already done so, consider getting out your 2009 tax return to review the income reported and the deductions taken to make sure you have taken each into consideration before year end. You may actually see something that you meant to take advantage of this year that you failed to consider last year.
2) Consider deferring any income that you can into next year: Unless you have reason to believe that your income will increase substantially in 2011 and as a result you will move into a higher personal income tax bracket; you may want to consider deferring some late 2010 income until after the first of the year. If you are self-employed, for example, consider sending your last invoices out in late December so you will more than likely receive payment in January.
3) Prepay your state and/or local taxes: If you are comfortable that your personal income tax bracket will NOT be higher next year, and you're not affected by the AMT, you may want to consider making state and/or local tax payments before the end of this year so you can increase your deduction this year.
4) If you're self-employed, take advantage of year-end office supply sales to stock up: This is the time to buy all of the business equipment and supplies you haven't yet purchased. Make sure to mark and save your receipts.
5) Be careful about buying a mutual fund for your taxable portifolio before the end of the year (especially if the mutual fund is actively managed): The later it gets in the year, the more likely you will pick up the capital gains distributions on a mutual fund that you would not have bought if you knew the fund was about to distribute capital gains. Check the distribution schedule and if the fund has NOT already distributed it's capital gains wait until it has before buying the fund.
6) If you have a mortgage, consider paying your January 1st mortgage payment on or before December 31st: This allows you to take an additional deduction for interest paid. Remember,the 1098 you receive from your lender may not show the January payment. Add the January interest payment amount to the amount reported by your lender.
7) Review you taxable investment portifolio: You may find opportunities to offset gains with losses. If capital gains are high, consider taking a loss to offset some of the capital gains income.
8)You may decide to pre-pay your Timeshare Maintenance Fees so that you can deposit your 2011 or 2012 week with your exchange company earlier.
If you decided to pre-pay your 2011 or 2012 Real Estate Taxes when you pre-paid your timeshare maintenance fees, make a note of the amount of Real Estate taxes pre-paid and; if your tax advisor agrees, add that amount to the amount of any Real Estate taxes that your tax advisor says you can deduct for 2010.
I am sure there are other tips that some of you can come up with. If so, share them here.
