End of year tax tips
by Milad Taghehchian, CFP(R) on November 15th, 2010

The end of each year represents a great time to review your financial decisions over the closing year especially in light of the effects these decisions may have on your taxes. Heres a quick checklist to review before the close of the year.

  • Spend your flexibile savings dollars: If you have been saving into a flexible savings account for dependent care or medical purposes throughout the year, your savings may be set up to disappear at the end of the year if they are not used. Make sure you review your plan and spend the money before it goes into the black hole.

  • Required Minimum Distribution: If you are over age 70 1/2 you will have to take minimum distributions from the bulk of your retirement plans. Visit the IRS website linked for instructions.

  • Max fund your 401k, IRA, Roth IRA or other retirement accounts: With tax changes on the horizon its important to shelter as much money from taxes as possible. Take advantage of your limits if you can.

  • Take some gains and losses: The end of the year is always a good time to get rid of your investment losers. You can write off a good chunk of your capital loses or take some gains and offset them with those losses.

  • Make your charitable gifts: Make charitable contributions before the end of the year. Remember to keep bank records or receipts for all cash donations. The IRS will require a written confirmation from the charitable organization for gifts over $250. Consider making gifts of securities rather than cash. If you have a gain in a security that you donate to a charity, more often than not you will be able to take the deduction for the full amount of your contribution while not having to pay the capital gains tax for the gain in that security.

  • Plan your energy credits: If you have made or are thinking of making certain green improvements the state, the feds, the county, and the city have various tax credits. Check them all out to ensure you have the proper documentation to take advantage this free money.

  • Start gathering all your documents and receipts now: Saving your tax preparer time means you save yourself money. If you do your taxes yourself, saving yourself time will save you from massive headaches.

  • Check your witholding: If you are getting a huge refund or have to pay each and every year, than you need to do a better job of understanding your witholding from your paycheck. No one likes to be surpirsed with a huge tax bill and this is the best way to make sure that doesn't happen. If you need to change your witholdings ask your employer for the form W4. Here are some great witholding calculators to help you out.
IRS Calculator
Kiplinger Calculator


As always make sure you review any tax questions or concerns with your tax advisors.


Posted in Tax Tips, Investments, Estate Planning    Tagged with Tax, Gifts, Donations, Witholding, 2010 Tax Tips, Capital Gains, Capital Loss, Required Minimum Distriubtions, Roth Conversions. 401k


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