Are you still looking for ways to cut your 2011 tax bill? Here are 10 tax-saving deals for last-minute shoppers.
1. Buy a personal vehicle. For 2011, you can choose to deduct either the state income tax or the state sales tax you’ve paid this year. If you buy a new vehicle in late December and you live in a low income tax state, it may tip the scales in favor of the sales tax option.
Tip: In lieu of compiling actual sales tax, you can base your deduction on an IRS state-by-state table plus the tax on big-ticket items like cars, trucks and boats.
2. Set up a Keogh plan. If you’re self-employed, you can make tax-deductible contributions to a Keogh profit-sharing plan. But the plan must be in existence before Jan. 1, 2012, so complete the paperwork this month. Then you have until your tax return due date, plus extensions, to make contributions for 2011.
Tip: The deductible contribution limit for 2011 is the lesser of: (1) 25% of your compensation or 20% of your self-employment income or (2) $49,000.
3. Stock your shelves. If you buy everyday supplies for your business during the last shopping week of the year you can deduct the expenses on your 2011 return. It doesn’t matter if you don’t actually use the supplies until 2012.
4. Postpone business invoices. If your business uses the cash method of accounting, you don’t have to pay tax on amounts your business has billed until you actually receive payment, even if you performed most or all of the work this year. Invoices sent the last week of the year aren’t likely to be paid until next year.
5. Lock in extra mortgage interest. You might decide to prepay the mortgage payment due on Jan. 1, 2012, in December to effectively give you a 13th mortgage interest payment for 2011. If you’re using “snail mail,” send the check before Christmas to ensure that the payment will be posted this year.
Tip: You’ll have to do the same thing next year-end to deduct 12 months’ worth of mortgage interest in 2012.
6. Cash in on worthless stocks. As with bad business debts, you can claim write-offs for stocks that have become worthless. The loss is treated as a capital loss. Contact your broker or the security issuer to find out whether a stock is worthless.
7. Prepay college tuition. If you will qualify for a 2011 deduction or credit for higher education expenses, prepay tuition for the academic period that starts in January-March of next year. Make the prepayment before the end of this year. That way, you can count the extra tuition as a 2011 expense and claim a larger deduction or credit.
Tip: U.S. Series EE Savings Bonds used to pay for college may be tax-free to your children, so they might want to cash in some bonds.
8. Get new equipment up-and-running. Your business can claim a generousof up to $500,000 in 2011, but only for qualified property acquired and placed in service before Jan. 1, 2012 (assuming your business uses the calendar year for tax purposes). Take items “out of the box” if you intend to deduct the cost this year.
Tip: Unless new legislation is enacted, the maximumdeduction will drop to $134,000 next year.
9. Empty flex spending accounts. Unless your company authorizes a special 2½-month grace period, any amounts remaining in a flexible spending account (FSA) at the end of the year are forfeited. This is the “use-it-or-lose it” rule for tax-favored FSAs.
10. Renew tax-advisory publications. Individual taxpayers can deduct the cost of tax advice, including subscriptions to publications such as Small Business Tax Strategies, as a miscellaneous itemized expense. As long as the renewal covers a 2012 subscription, you can write off the cost this year if you pay it by Dec. 31, 2011.
Like what you've read? ...Republish it and share great business tips!
Attention: Readers, Publishers, Editors, Bloggers, Media, Webmasters and more...
We believe great content should be read and passed around. After all, knowledge IS power. And good business can become great with the right information at their fingertips. If you'd like to share any of the insightful articles on BusinessManagementDaily.com, you may republish or syndicate it without charge.
The only thing we ask is that you keep the article exactly as it was written and formatted. You also need to include an attribution statement and link to the article.
" This information is proudly provided by Business Management Daily.com: http://www.businessmanagementdaily.com/28951/find-10-last-minute-tax-breaks-in-2011 "