In just two short days, we’ll be wishing a fond farewell to 2010 and welcoming 2011 with open arms. Although the end of the year is upon us, it isn’t too late to capitalize on one or more of these five year-end tax tips.
Empty your Flexible Spending Account
If you funded a Flexible Spending Account (FSA) this year, make sure that you’ve made all of your eligible purchases by Dec. 31. With FSAs, if you don’t use it, you lose it. For more information on what medical expenses can be reimbursed under an FSA, download IRS Publication 969 (PDF).
Make a last-minute charitable donation
‘Tis the season of giving and if you haven’t donated to your favorite charity this season, there’s still time to do so. Thankfully in today’s Internet-centered world, many charities accept monetary donations on their websites. If you have items to donate, local nonprofit organizations may have dropoff locations open on Thursday and Friday — just don’t forget to get a receipt. Depending on your individual situation, you may be able to take advantage of a tax deduction for your donation.
Pay January’s mortgage payment now
If you have a mortgage, paying your January mortgage payment this month may have tax advantages if you itemize your deductions. The interest portion of your monthly payment will be added to your 2010 Form 1098 because it was paid this year.
Pay tuition for spring 2011
If you are a college student or footing the college bill for one of your dependents, pay spring 2011 tuition now. Depending on your income and tax situation, you may be able to take advantage of one of several educational tax credits. For more information, download IRS Publication 970 (PDF).
Fund a retirement account
If you haven’t funded an IRA yet this year, it’s not too late to get started. You actually have until April 15, 2011, to fund your IRA for 2010 and benefit from the tax advantages. If you already have an IRA set up and you’ve not yet maxed it, this is a good time to invest some extra money into your future and save a little on taxes now.
While these five ideas come with tax benefits for some, not everyone is able to take advantage of them. You should check with your accountant to ensure that you qualify for the tax savings.
What tax-advantaged choices are you making as 2010 comes to a close?