2009 is almost over, and if you believe that the decade started in ’00, then your decade is ending as well.
It’s time to consider the last minute things you can do to save on your taxes. With just three weeks left until the new year, take advantage of what you can.
- If you have an FSA (flexible spending account) and have any balance remaining, there are some easy ways to spend on items you can submit for reimbursement. Visit the eye doctor, and get new glasses. Review the list of reimbursable drugstore items and stock up. Bandaids, Ace Bandages, aspirin, cold medicine, birth control, there are quite a few things you can buy that are covered by FSAs. Don’t lose the chance to get your money back.
- It may already be too late to adjust your 401(k) withholding for 2009, but it’s the right time to consider bumping your percent for 2010.
- If you are right on the edge of the standard deduction or the ability to itemize (for single, it’s $5,700 married filing joint, $11,400) consider this strategy; In odd years, make two year’s worth of donation, half in January , half in December. In December, make the January mortgage payment, and take the interest for 13 months worth of payments. Also in December, make the next property tax payment. In simple terms, cluster all itemized deductions you can into the one year, and take advantage of itemizing. In the even years, make just the 11 months mortgage payments, no charitable donation, and only the property tax due. This strategy works best if you were very close to the numbers mentioned.
- If you are 70-1/2 or older and don’t itemize, donating to a charity directly from your IRA can have the same effect as the deduction as the withdrawal is not considered income.
- If you are in the 10 or 15% tax bracket, consider selling appreciated stocks and take advantage of a 0% cap gain rate.
- If you are already retired, try to forecast your taxable income for the year and convert just enough IRA money to a Roth to “top off” your present bracket.
- Any change in family status, marriage, divorce, having a child, etc, and you should check that all you beneficiary designations are still how you want them.
- As always, if you have losses in any non-IRA stocks or mutual funds, you can use up to $3000 of that to offset ordinary income. If you still want to hold the position, you can but it back after 30 days to avoid running afoul of the 30-day “wash rule.”
Any other ideas I may have overlooked? Pass them along!
Enjoy the weekend,