Wednesday, August 22nd, 2018

7 Opportunities to Save on Taxes Before 2011


Tax planning before the new year 205x300 7 Opportunities to Save on Taxes Before 2011Guest post from Baby Boomer Roman Janos of Northwestern Mutual

Along with the bustle of the holiday season, looking back at the goals you accomplished in 2010, and looking forward about your goals for 2011, remember to include another important item on your December “to-do” list. It is time to do what you can before the end of the year to save on 2010 taxes.

While contributions to your personal retirement accounts can be made after January 1 and still count for this year, other tax-saving steps must be completed by the end of the calendar year to apply in 2010. Be sure the following are done by close of business on Friday, December 31, if you want to claim the deductions:

Pay real estate taxes – payment must be received before close of business on the 31st to be tax deductible this year. Whatever amount you pay by that date, whether for the first half of your property tax bill, it can be deducted on your itemized return if you have a receipt (be sure to request one!)

Pay college tuition before the end of the year – This deductible expense can be applied to your 2010 taxes if you pay it before the end of the year, so if any tuition payments are due in early 2011, consider paying them before December 31.

Donate to a cause – Charitable contributions to a 501(c)3 non-profit organization are tax deductible to the extent allowable by law – consult your tax advisor for specific rules.

Purchase any tax-deductible items or services – Qualifying items and services may be deducted on your tax return for 2010 if they are purchased on or before December 31. This includes anything paid for with a credit card that will be invoiced in the New Year. For specifics, consult your tax advisor or find details at

Sell appreciated capital assets – If you have the option before the end of the year, consider selling stocks or real estate on which you would pay capital gains. The top capital gain income tax rate is increasing from 15 percent to 20 percent in 2011.

Take any available dividends now to get 15 percent income tax rate. Though dividends have traditionally been taxed at ordinary income tax rates, over the last few years qualified dividends have been taxed at the capital gains rate of 15 percent. In 2011, dividends will again be taxed at the higher ordinary income-tax rates. So, if you can choose to take a dividend from a corporation before year-end, you could have a significant advantage.

Convert to a Roth IRA and spread the income tax over next two years. Roth conversion triggers income tax on the amount transferred from the pre-tax traditional IRA to the after-tax Roth, though future qualified distributions from the Roth are income-ta


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