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Personal Year-End Tax Planning Ideas
There's still time to do something about decreasing this year's tax bill. Consider these tax saving ideas before 2010 comes to a close:
Increase your deductions. If you were able to itemize last year, review your schedule A with an eye towards maximizing these deductions before the end of 2010. Some ideas include:
Consider paying your state estimated tax payments before year end.
Increase the mortgage interest deduction by paying your January mortgage payment in December.
Maximize charitable contributions, including giving stocks, bonds or other investments that have increased in value. You can deduct the full market value of these items while avoiding capital gain taxes.
Increase your IRA. Eligible taxpayers can contribute up to $5,000. Consult our professionals on limitations and exclusions.
Decrease your IRA. Confused? Read on! If you are over the age of 70 ˝, eligible donors can instruct IRA custodians to issue gifts to qualified charitable organizations of up to $100,000-regardless if you "Itemize" or are subject to AMT. Gift amounts are freed from future income taxes and other "death taxes". Above all, it's easy! Contact your IRA trustee or custodian.
Review your investments. Carefully consider selling investments such as stocks that have gone down in value. Losses may be used to offset any capital gains you may have. Additional losses can be deducted against ordinary income (up to $3,000), and carried forward to future years. Wait at least 30 days before buying back stock or your deduction will be postponed.
Be Aware of the Kiddie Tax. After 2007, Kiddie Tax will affect a lot more children. Starting in 2008, Investment income over $1,800 from full-time students under the age of 24 and all children under the age of 19 will be taxed at the parents' tax rate.
Any Finally……
Remember the time for implementing these and other tax planning strategies are before the end of the year. The above tax topics are only a generalized overview of some of the tax planning available. There are many exceptions, phase-outs, and limitations to the above ideas. Please consult with one of our tax professionals with further questions. Call us to schedule an appointment.
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