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7 ways to save on taxes before Dec. 31
Source:
articles.sun-sentinel.com
- Dec 15, 2011
December 13, 2011|By Donna Gehrke-White, Sun Sentinel
Uncle Sam may provide you with a holiday treat — tax savings that can amount up to thousands of dollars — if you act before Dec. 31.
The federal income tax credits and deductions may come in handy as this year couples will not receive the $800 ($400 for singles) Making Work Pay tax credit. The tax credit ended this year.
Here are seven ways to save on 2011 federal income taxes before Dec. 31:
Make a charitable gift. Give to a 501(c)(3) charity and deduct the amount, including the value of donated items. The Salvation Army estimates how much you can deduct at salvationarmysouth.org/valueguide.htm. Donations charged to a credit card by Dec. 31 are deductible for 2011, said Mike Dobzinski, a Plantation-based spokesman for the Internal Revenue Service.
Pay January's mortgage payment before Dec. 31 so you can deduct 13 months of interest instead of the usual 12 to save more on taxes, suggested Tropical Financial Credit Union's Craig Weisman.
Add to your 401(k) retirement account as long as you haven't contributed up to $16,500 this year — with a $5,500 catch-up contribution allowed if you are 50 or older, Weisman suggested. Lower income workers — couples who earn less than $56,500 per year or singles who make less that $28,500 — also may qualify for Retirement Savings Contribution Credits, the IRS' Dobzinski said. The credit is worth up to $2,000 for a couple or $1,000 for a single person.
Consider selling investments that have dropped in value. Taxpayers can deduct capital losses up to the amount of capital gains plus $3,000, Dobzinski said. Thinking of selling profitable stocks? You might want to postpone until after Dec. 31 to avoid paying taxes for 2011.
Tally your child's college tuition, fees and other approved expenses so you can take off up to $4,000 on your federal taxes, courtesy of the American Opportunity Tax Credit, advised Sheri Schultz, a Plantation certified public accountant.
Earn up to a $500 credit for installing energy-efficient windows, doors, roofs, air conditioners and heating systems, Schultz added.
Don't forget the Sales Tax Deduction that Floridians are eligible for. The deductions cover the tax on a large end-of-year purchase such as a car. The tax on those big buys can be added to the online sales tax tables at IRS.gov.
The IRS website also has tax forms and publications.
Category: IRS
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