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Five Year-End Tax Tips

Posted by McDonald & Osborne Posted on Oct 12 2015

The New Year is just around the corner. Before we know it, we’ll be picking up the confetti. And then we’ll be inadvertently dating everything 2011 when we should be writing 2012. (It never fails, I do this every year.) We have less than three days to claim certain tax benefits for the year 2011 before it’s too late. Here are five to consider:

  1. Energy-Efficient Home Improvements: You still have time this year to make energy-saving and green-energy home improvements and qualify for either of two home energy credits. Installing energy efficient improvements such as insulation, new windows and water heaters to your main home can provide up to $500 in tax savings. Homeowners going green should also check out the Residential Energy Efficient Property Credit, designed to spur investment in alternative energy equipment. The credit equals 30 percent of the cost of qualifying solar, wind, geothermal, or heat pump property. For details see the Home Energy Credits Still Available for 2011 Tax Tip on the website

  2. Charitable Contributions: If you itemize deductions, your donations must be made to qualified charities no later than Dec. 31 to be deductible for 2011. You must have a canceled check, a bank statement, credit card statement or a written statement from the charity, showing the name of the charity and the date and amount of the contribution for all cash donations. Donations charged to a credit card by Dec. 31 are deductible for 2011, even if the bill isn’t paid until 2012. If you donate clothing or household items, they must be in good used condition or better to be deductible.

  3. Contribute the Maximum to Retirement Accounts : Elective deferrals you make to employer-sponsored 401(k) plans or similar workplace retirement programs for 2011 must be made by Dec. 31. However, you have until April 17, 2012 , to set up a new IRA or add money to an existing IRA and still have it count for 2011. You normally can contribute up to $5,000 to a traditional or Roth IRA , and up to $6,000 if age 50 or over. The Saver’s Credit , also known as the Retirement Savings Contribution Credit, is also available to low- and moderate-income workers who voluntarily contribute to an IRA or workplace retirement plan. The maximum Saver’s Credit is $1,000, and $2,000 for married couples, but the amount allowed could be reduced or eliminated for some taxpayers in part because of the impact of other deductions and credits.

  4. Portfolio Adjustment: Check your investments for gains and losses and consider sales by Dec. 31. You may normally deduct capital losses up to the amount of capital gains, plus $3,000 from other income. If your net capital losses are more than $3,000, the excess can be carried forward and deducted in future years.

  5. Qualified Charitable Distribution: If you are age 70½ or over, the qualified charitable distribution (QCD) allows you to make a distribution paid directly from your individual retirement account to a qualified charity, and exclude the amount from gross income. The maximum annual exclusion for QCDs is $100,000. The excluded amount can be used to satisfy any required minimum distributions that the individual must otherwise receive from their IRA s in 2011. This benefit is available even if you do not itemize deductions.

These are just a few considerations to make before the end of the year. And don’t forget that one of the most important parts of tax planning is good record keeping! Keeping track of your receipts and records will make filing your tax return easier and more accurate. Give us a call if you have any questions.

Lisa Osborne
Office Administration

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