Year-End Tax Planning
Year-end tax planning opportunities have increased this year because of all of the new tax laws that have been signed by the President.
I recommend a basic strategy that says defer income to next year and accelerate deductions that will benefit you this year. Another recommendation is that you review the following tax strategies to determine if any would help reduce your 2010 tax liability.
1. Prepay California income tax to increase federal itemized deductions
2. Prepay January house payments for residence and rental properties
3. Prepay income tax preparation fees
4. Use your automobile for charitable organizations (14 cents/mile)
5. Sell stock for losses this year (Maximum deductible loss is $3,000)
6. Charitable donations-cash and non-cash
7. Prepay for travel expenses for business purposes
8. Prepay property taxes due next April for both residence and rentals
9. Invest in T-Bills or CD’s: interest in is taxed next year
10. Open and fund your personal retirement plans: IRA, 401K, SEP-IRA
11. Start your part-time business this year to deduct start-up costs
12. Prepay childcare expenses (Maximum $3,000/child)
13. Establish proof of bad debts to claim bad debt deduction
14. Accelerate payment of miscellaneous deductions if more than 2% AGI
15. Increase medical expenses if you can exceed the 7.5% AGI
16. Deduct job-hunting expenses, even if you don’t change jobs
17. Prepay expenses such as professional organization dues & trade publications
18. Defer income until next year from bonuses, commissions and salary
19. Consider tax impact of delaying or speeding up marriage or divorce
20. Tuition deduction is $4,000 max or $2,500 max tax credit
21. Gifts of $13,000, shift interest income to children
22. Tax-free exchange to defer gains on sale of rentals
23. Energy credit for home improvements is $1,500 max
24. On stock sales, long-term capital gains incur tax rate of 10-15%
25. Adoption credit is $12,150 max
26. Purchase business equipment & deduct up to $250,000
27. Plan to file early & use refund to fund SEP & IRA
28. Prepay estimated taxes to avoid underpayment penalties
29. Increase withholdings to avoid under payment penalty
30. Pay for rental property expenditures & repairs
31. Pay for year-end entertainment & gifts for business clients
32. Purchase business & office supplies, stamps, & envelopes
33. Purchase a passive income investment to offset passive losses
34. Prepay January office rent
35. Pay for business auto expenses (repairs, tires, battery, Ins, & motor club dues)
36. Defer December rental income until January
37. Enroll in employer provided tax-deferred programs
38. Invest in tax-exempt bonds or tax-free mutual funds
39. Preserve exemptions for dependents (Deduction is $3650)
40. Pay your children & spouse for time spent working for your business
41. Sell your passive loss activities to deduct suspended passive losses
42. Determine if you own worthless stocks that you might deduct
43. Buy a real estate investment that can provide depreciation & tax-sheltered income
44. You may be able to claim parents as dependents, if you help support one or both
45. Prepay educational expenses to maintain or improve job skills
