Are you facing a higher-than-expected tax bill on your 2010 return? You may have pulled down a big capital gain after the stock market rebound last year. Or maybe your business rallied during the holiday season. Perhaps other factors—such as the loss of personal exemptions or education tax breaks for older children, reduced mortgage interest deductions and the alternative minimum tax (AMT)—have combined to increase your overall tax liability.
Don’t despair. It’s not too late to cut your 2010 tax bill with some savvy moves on your return. Here are six prime examples.
1. Postpone tax on a Roth conversion
Did you take advantage of a Roth conversion in 2010? For the first time, taxpayers could convert funds in a traditional IRA to a Roth, regardless of their income. Previously, conversions weren’t allowed for anyone with an adjusted gross income (AGI) above $100,000.
Strategy: When it makes sense, pay the conversion tax over the...(register to read more)