Last Minute Moves to Cut Your 2010 Taxes
Quick Tip: Last-Minute Moves to Cut Your 2010 Taxes
Yup, it’s time to get serious about how to cut your 2010 tax bill. Here are some easy moves you can make before the end of the year to pay less tax and save more money:
Complete a Roth IRA conversion. If you handle this chore before the end of the year, you’ll get a pass on paying the tax in 2010. Instead, the IRS will let you pay half in 2011 and the remaining half in 2012. A previous article I wrote can help you decide if a Roth conversion is right for you.
Make energy-saving improvements. Certain types of home repairs and appliances put into service in 2009 and 2010 can save you a bundle on taxes. Find out how to qualify for this generous 30% tax credit.
Drain your flexible-spending account. Employer-provided FSAs require you to spend the money on an annual schedule. If your deadline is December 31, be sure to empty it on time so the balance doesn’t turn into taxable income.
Boost your retirement savings. If you’re getting a year-end bonus, that’s a great opportunity to max out your 401(k) and lower your taxes at the same time. If you don’t have a workplace retirement plan, you can still get a tax break for 2010 if you fund an IRA by April 15, 2011.
Buy a hybrid vehicle. Don’t wait to get your new fuel-efficient car because tax credits for qualifying hybrid vehicles expire at the end of 2010.
Also, don’t miss your 1040 deadline! If you requested a six-month extension of time to file last year’s taxes using Form 4868, October 15 is the deadline to submit your 2009 return.
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