Although your 2011 tax return isn’t due until April 15, 2012, you’ve got until Dec. 31 to make some last-minute, refund-boosting changes or take advantage of soon-to-expire tax credits.
If you’re planning on making an energy-efficient upgrade to your home and want to take advantage of generous tax credits, act fast because many programs are scheduled to expire at the end of this year. Other credits that will expire are the deduction for certain higher education expenses, the sales tax deduction and even a deduction for teachers who spend their own money on classroom supplies.
SmartMoney.com advises taxpayers to make sure that the changes they make at the end of this year won’t increase their 2012 tax bill more than it reduces their 2011 tax bill. Year-end strategies featured in the article include converting a traditional IRA into a Roth IRA and boosting your charitable giving.
Eleanor Laise expands upon the basic idea of charitable giving and shows readers how they can get more out of their donations this holiday season. One of Laise’s suggestions is to transfer money from a traditional IRA directly to a charity. Unfortunately this form of donation may no longer be an option after the end of the year.
While most tax advice stands the test of time, taxpayers should pay more attention to their year-end tax moves in today’s shaky economy. For example, if you think you will have to pay the alternative minimum tax (AMT) in 2011, it may be better to make certain tax-benefiting moves next year instead of this year.
Most of the advice given in the previous articles is geared towards personal tax filings, but I didn’t want to leave out advice aimed at small business owners. Small businesses are the backbone of the nation’s economy, and there are several steps that can be taken to reduce the 2011 tax burden, including the creation of a 401(k) plan for employees and exploring local and state tax credits.
As with all things involving the Internal Revenue Service, please consult your CPA or tax professional for advice specific to your financial situation.