If you want to pay the absolute minimum to Uncle Sam, tax planning must be a year-round pursuit. With summer right around the corner, you can cash in on several key tax breaks by springing into action now. If you procrastinate until the end of the year, you’ll miss out on valuable deductions and credits for yourself, your business and your family. This special report explains a dozen timely moves you should take before the leaves begin to fall.
Did you buy a place in the country in the days before suburban sprawl? If so, you can nail down a tax deduction this year simply by agreeing to preserve the land in its pristine state.
Q: My company is being investigated for making illegal kickbacks. (I wasn’t involved in the allegations.) If we are found guilty, are the payments at least tax deductible? No name, via e-mail
You aren’t allowed to deduct the value of services you personally provide to a charity. But you can deduct the cost of someone else’s services.
The IRS says your company can provide free e-filing of employees’ tax returns.
Why bother tracking your medical expenses? Tax rules say you can start deducting unreimbursed medical expenses only after they exceed 7.5 percent of your adjusted gross income (AGI). So if your AGI is $100,000 this year, you’d need to fork over $7,500 of your own cash before you can deduct one single nickel.
IRS won’t save you from high gas prices
Don’t let tax tail wag the investment dog
Get dates straight on tax-prep deduction
Don’t jump ship on muni bond funds
Show some trust in REITs
Q: I just started a new business where I work from home. For business travel, I’m using a car I bought in 2001 for $32,000. Can I deduct depreciation based on the original cost? D.J., Spring Valley, N.Y.
Q: I still do some work as a consultant, but I must start taking distributions from my IRA before April 1 of next year. If I convert to a Roth IRA this year, can I avoid taking the distribution (and the resulting tax)? R.A., Duluth, Minn.
Q: We took out a $320,000 mortgage to buy our home several years ago. We recently used inheritance money to pay off the $220,000 balance on the mortgage. Our house is now worth around $700,000. If we take out a new mortgage for $400,000, can we deduct all of the mortgage interest we’d pay? L.M.S., Montvale, N.J.