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Make Your Year-End Tax Savings List Now
Source:
prnewswire.com
- Dec 13, 2011
CHICAGO, Dec. 9, 2011 /PRNewswire-USNewswire/
It's the season for making a list and checking it twice, but a holiday to-do list isn't the only one you should be working on before the year ends. Be your own Santa and write up a list of money moves you can make now that will be a gift to yourself come tax time. Take a look at these year-end tax tips from the Illinois CPA Society to see what works best for your financial situation.
Make Charitable Donations – You can deduct donations on your 2011 return if you itemize your tax return. Keep good records. Monetary gifts, the value of materials or food donations, and even the out of pocket expenses you incur while volunteering, such as gas and travel costs, can all be deducted. You can also deduct the fair value of any clothing or household items in good condition that you donate. If you are donating inherited items or furniture, an appraisal may be helpful to determine value. With any donations, make sure to get receipts for documentation.
Consider Energy Saving Home Improvements - If you were planning on replacing that old furnace anyway, you could save up to $150 with a qualified energy efficient unit if you do it by the end of the year. Insulation, new windows and doors, solar heaters and other items are also covered under The Nonbusiness Energy Property Credit and the Residential Energy Efficient Property Credit. Details can be found at www.IRS.gov.
Pay Bills Early - Paying certain bills in 2011 will allow you to write off a deduction earlier. For example, if you pay your January 2012 mortgage bill on or before December 31, you may deduct an extra month of interest in 2011.
Contribute to Your Retirement Plans - A contribution to your 401(k) plan is pre-tax money excluded from your income so it lowers your tax bill. It's a good idea to contribute as much as possible to reduce the taxes you pay and to stay ahead of any possible tax reforms that may limit future contributions. For 2011, you can contribute up to $16,500 to a 401(k) plan (or $22,000 if you 50 or older).
Look Into Expiring Tax Breaks - There are several tax breaks that expire at the end of 2011 and you want to be sure you've made the related expense within the calendar year. These include the classroom expense deduction which allows teachers to deduct up to $250 for books, supplies and other related expenses, and a tuition deduction where up to $4,000 in tuition can be deducted. Amounts paid in 2011 for classes starting in early 2012 can qualify for a deduction on your 2011 tax return. These breaks may be reinstated, but it's best to act now.
Working with a CPA throughout the year will keep you well-prepared to get the best return on your taxes. If you're looking for a CPA to help you file your 2011 state and federal tax returns, use the Find a CPA directory which can be found on the Illinois CPA Society site's homepage, www.icpas.org.
Category: IRS
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