Tax season is in full tempo. Taxpayers receiving a refund tend to file earlier in the year, while those who owe Uncle Sam often wait until closer to the filing deadline. Whether you file now or wait until the last minute, make tax time easier with these tips. According to Michael Goodman, PPA/PFS, CFP and President of Wealth stream Advisors. “A little planning can go a long way”. According to Goodman, if you expect to be in a lower tax bracket next year, accelerate your deductions this tax year. Check out the deductions that are due to expire in 2011
Make Charitable Contributions – To be deductible for 2011, donations must be made to qualified charities no later than Dec. 31. Taxpayers must have a canceled check, a bank or credit card statement or a written statement from the charity showing the name of the charity and the date and amount of the contribution.
Higher education expenses: With Adjusted Gross Incomes (AGI’s) of taxpayers up to $65,000 for singles and $130,000 for couples can claim deductions for college tuition and fees worth $4,000.
Contribute the Maximum to Retirement Accounts – Elective deferrals to employer-sponsored 401(k) plans or similar workplace such as retirement programs a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, and the Thrift Savings Plan for federal employees, must be made by Dec. 31.
Consider a Portfolio Adjustment – Check investments for gains and losses and make sales by Dec. 31. Taxpayers may normally deduct capital losses up to the amount of capital gains, plus $3,000 from other income. Net capital losses that are more than $3,000 can be carried forward and deducted in future years.
Mortgage insurance deduction: Borrowers with AGI’s up to $100,000 may be able to treat qualified mortgage insurance as home mortgage interest, which beckons that 100 percent of 2011 premiums may be deductible.
Don’t Overlook the Small Business Health Care Tax Credit – Small employers that pay at least half of employee health insurance premiums may qualify for a tax credit of up to 35 percent of the premiums paid.
Install Energy-Efficient Home Improvements – Make energy-saving and green-energy home improvements and you can qualify for either of two home energy credits. Installing energy efficient improvements such as insulation, new windows and water heaters can provide up to $500 in tax savings.