..There’s still time for year-end financial housekeeping to minimize your 2011 Tax Liability.
Here are a few of my thoughts.
Fund your Retirement Account - Invest the maximum amount if you can. Maximum contribution limits depend on the type of plan you have.
True-up your Q4 Estimated Tax Deposit - If you make estimated tax payments, work with a CPA to plan your 2011 tax liability before your Q4 payment is due in January 2012 to avoid overpaying or underpaying.Sell Losing Investments - You may be able to offset gains from investments by selling losers.
Maximize your Itemized Deductions - If you itemize and you paid sales tax on a large purchase in 2011 (i.e. a new car) you may be able to maximize your tax savings by choosing to deduct Sales Tax instead of State Income Tax.
Upgrade Your Home - This is your last chance to claim a tax credit for making energy-efficient improvements to your principal residence. The home-energy tax credit expires at the end of this year.
Donate to Charity - If you itemize your deductions, you may be able to reduce your tax bill by donating items or money before year-end.
Give to your Family - You can give up to $13,000 this year to any number of recipients and avoid the Gift Tax.
Spend Down your Flex Plan if you have one.
If You Own a Business
Purchase equipment that qualifies for Section 179 or Bonus Depreciation - If you own a business you can reduce income by placing equipment in service before December 31.
Pay Employee Bonuses before year-end.
You can reduce your taxable income by writing off any obsolete inventory.
Make a charitable donation through your business.
There is a good chance that tax rates will increase after 2012 and tax breaks will be harder to find. Be sure to consult a qualified professional about whether these strategies are right for you.
