Strategy: Take time to assess your tax situation. By making a few moves midway through the year, you can cut your 2010 tax bill by hundreds or thousands of dollars.On the other hand, if you wait until the end of the year to seize these tax-saving opportunities, it’s often too late.
How can you safeguard your personal wealth – and slash thousands off your tax bill? 17 Tips to Supersize Your 2010 Tax SavingsHere are 10 timely techniques to contemplate.
1. Ramp up equipment purchases. The new Hiring Incentives to Restore Employment (HIRE) Act gives the tax go-ahead to spend freely. Under Section 179 of the tax code, you can write off up to $250,000 of qualified business assets placed in sevice in tax years beginning in 2010.
2. Move into your new home. The homebuyer’s credit isn’t limited to first-time purchases. For acquisitions after Nov. 6, 2009, you can claim a maximum credit of $6,500 if you’ve owned and used a home as your principal residence for any five consecutive years out of the past eight.3. Protect your capital losses. Under the “wash sale” rule, you can’t deduct a loss on the sale of securities if you acquire substantially identical securities within 30 days of the sale. But you have plenty of room to maneuver at midyear without forfeiting a capital loss. For instance, if you sell a stock at a loss on July 1, you can buy it back on Aug. 1 with no problem. The loss can offset capital gains plus up to $3,000 of ordinary income in 2010.
4. Avoid an AMT ambush. Did you get a surprise notice from the IRS informing you that you owed the alternative minimum tax (AMT) for a prior year? Don’t let it happen again.5. Exhaust your energy credit output. The tax law allows you to claim a credit of up to 30% of the cost of installing energy-efficient products in your home. The improvements may range from a new water heater to insulation materials. The maximum $1,500 credit is available for purchases made from Jan. 1, 2009, through Dec. 31, 2010.
Every year the IRS takes a good slice of your taxable income from you. But you may be entitled to claim more tax goodies than you think when tax-return time rolls around.
We’ve uncovered 17 ways you can protect your holdings, plus save yourself thousands of dollars come tax time. You’ll keep thousands in your pocket – this year! And you’ll never have to worry about higher taxes, no matter what the Obama administration does. Get 17 Tips to Supersize Your 2010 Tax Savings now...
6. Secure exemptions for dads and grads. If you provide over half the annual support of a relative, such as a child or an elderly parent, you may be able to claim a dependency exemption for that person. Each personal exemption (including dependency exemptions) is $3,650 in 2010 (the same as 2009).
7. Pull the trigger on a Roth conversion. For the first time, many high-income taxpayers can convert the assets in a traditional IRA to a Roth IRA. Prior to 2010, a conversion wasn’t allowed in a year in which your modified adjusted gross income (MAGI) exceeded $100,000. Payoff: Although the conversion is taxable, future distributions from the Roth may be tax-free. Or you can preserve the entire nest egg for your heirs without taking lifetime withdrawals (unlike a traditional IRA).
To sweeten the deal, the taxable income from a 2010 conversion can be split evenly over the following two years—2011 and 2012.
8. Pack off the kids to day camp. If you pay someone to watch an under-age-13 child while you and your spouse work, you may be eligible for a dependent care credit. The credit is generally equal to 20% of the first $3,000 of qualified expenses for one child: $6,000 for two or more children.
9. Treat a client to a round of golf. Deductions for country club dues are long gone. But you can still qualify for a few tax breaks if you take a client to the club. The tax law allows you to deduct 50% of your entertainment costs preceding or following a “substantial business discussion.”
10. Hire extra summer workers. If you employ workers from an economically disadvantaged group, your business may be entitled to a Work Opportunity Tax Credit (WOTC). The credit equals 40% of the first $6,000 of wages paid to a qualified worker during the year.
Some of the advice in 17 Tips may be items you or your financial advisor have overlooked. Others may be things you never knew about. But ALL have the potential to send your tax savings through the roof:
- What special donations carry enhanced deductions?
- Annuitize your IRA – and pay ZERO penalties
- Two 2010 tax deductions you’d better be aware of
- Getting Uncle Sam to pay for your next vacation
- Four popular retirement plans: Which is right for you?
- Draw cash from your C corp – and thumb your nose at the IRS
- Three ways to avoid penalties on estimated tax payments
- How to beat the “50% rule” and deduct 100% of business entertainment
- Five danger signs for small business owners
- And much, much more!
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- Small Business Tax Deduction Strategies
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- 14 bright tax ideas for 2014
- Shift to 'actual cost' car deductions to offset high gas prices
- Will the IRS hike standard mileage rate?