Checklist of things to do before the end of 2011 There are many tax-saving steps that can be taken before the end of this year. Here is a list of the most important actions that should be taken no later than Dec . 31 , 2011 to save on your taxes:
Individual Tax Planning 1. Realize losses on stock, wh ile substantially preserving investment position 2. Convert investment income, taxable at regular rates (e .g., interest income), into qualifying dividend income 3. Arrange with your employer to defer bonus until 2012 4. Increase the basis in S corporation or partnership, to make possible a 2011 loss deduction 5. Use a credit card to prepay expenses 6. Make energy saving improvements to your home that qualify for tax credits in 2011 7. Pay contested taxes in order to deduct them this year, while continuing to contest them the following year 8. Put equipment in-service before year-end to qualify for the 100% bonus first-year depreciation allowance 9. Make expenditures qualifying for the $500,000 business property expensing election 10. Settle an insurance or damage claim if this will maximize casualty loss deduction 11. Apply bunching strategy to "miscellaneous" itemized deductions, medical expenses, and other itemized deductions to increase deductible amounts. 12. Increase withholding to eliminate or reduce an estimated tax penalty 13. Set up a self-employment retirement plan 14. Make gifts that take advantage of the $13,000 gift tax exclusion 15. Watch out for marriage penalty in regard to year-end marriage or divorce plans 16. Consider deferring a debt cancellation event until 2012 17. Decide whether to elect to deduct investment interest against capital gains and/or qualified dividends .
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18. Avoid personal holding company tax by making dividend payments 19. Take steps to avoid or minimize income tax on Social Security benefits 20 . Structure a real estate deal to avoid paying interest on tax deferred under installment method 21. Step up level of participation in business activity to meet the material participation standard, under passive loss rules 25. Dispose of passive activity to free up suspended losses 26 . Ask your employer to increase withholding of state and local taxes in order to pull the deduction of those taxes into 2011 27 . Extend subscriptions to professional journals , pay union or professional dues, enroll in (and pay tuition for) job-related courses, etc., to bunch into 2011 miscellaneous itemized deductions that are subject to the 2%-of-AGI floor 28 . Taxpayers who itemize may accelerate a big ticket purchase, such as a boat or car, into 2011 to qualify for state and local sales tax deductions, instead of state and local income taxes 29 . Consider making expenditures that qualify for 100% bonus first-year depreciation, if bought and placed in-service in 2011 30 . Nail down a work opportunity tax credit (WOTC) by hiring qualifying workers , such as certain veterans , before the end of 2011 31 . Make qualified research expenses before the end of 2011, to cla im a research credit 32 . If you own an interest in a partnership or S corporation, you may need to increase your basis in the entity, so that you can deduct a loss from it for 2011
These are just some of the year-end steps that can be taken to save taxes . Again, by contacting us, we can tailor a particular plan that will work best for you . For more information on one of the points outlined above , please contact Craig Godfrey at Craig.Godfrey@myGWBcpas .com, Eric Williams at Eric .Wiliiams@myGWBcpas.com or by calling 517-908-0888.
The Internal Revenue Service recently issued regulations that require written advice regarding tax matters to meet very detailed and comprehensive requirements before it can be relied upon by a taxpayer to avoid penalties that might apply if the tax benefits or results discussed in this
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document (and any attachment) are disallowed . Compliance with these rigorous standards and requirements exceeds the scope of this newsletter. Consequently, the analysis and advice contained in this document, and any attachments, regarding federal tax matters is not intended to be used, and may not be relied upon by you or anyone else, for the purpose of avoiding any federal tax penalty.
This newsletter provides general information and may not apply to your particular situation. In addition , this article does not offer legal or tax advice.
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