With 2010 quickly winding down and the election behind us, we are still here to provide you with the best ways to reduce your income taxes heading in to the new year. Of course, we also don’t know what is going to happen to the Bush Tax Cuts, but here are some general tips that can help you regardless of what Congress decides to do.
1. Max your retirement plans—We suggest that you make out your 401k up to the company’s matching contribution and then max out your Individual Retirement Accounts then go back and further fund the 401k or similar plans.
2. Donations—make sure you contribute to your local church or other tax deductable charities. Make sure you keep your documentation to prove the donation was made.
3. Go green! Buing hybrid or another green purchase such as an energy efficient furnace will qualify you for a tax credit.
4. Limit your losses—some investment losses and losses from uninsured damage to property may be eligible as tax deductions.
5. Did you find a new job? Certain job-hunting expenses may qualify for a tax deduction as well as moving expenses. Make sure you talk to your Liberty Tax® professional!
6. Track your medical expenses—if your medical expenses are above 7.5% of your adjusted gross income then can claim them as a deduction.
7. Consider Pre-tax benefit plans such as a Flexible Spending Account to help reduce the total amount of tax you will pay.
8. Take long-term capital gains in 2010. The 15% capital gains rate is scheduled to increase to 20% next year.
9. Have a baby! So this might cost you in the long run, but if you are short sighted and are only worried about reducing your tax liability then feel free to take advantage of the child tax credit and you can deduct future expenses when you are paying for their education.
10. Work with your local Liberty Income Tax preparation office —these one should be number one because it will save you tons! We are trained and licensed to assist you with your taxes and this is the best way to save on your taxes!