Published on Wednesday, 30 November -0001 00:00
There is just one month left in 2011. Have you done all that you need to do to simplify your tax situation and take advantage of the tax breaks available to you? The Minnesota Society of CPAs (MNCPA) offers this advice on actions you can take today that will make life easier, and perhaps save you money, next April and in the future.
Organize your records
There's nothing worse than a last-minute scramble in the spring to pull all of your important documents together in time to meet the tax return deadline. That's why it's a good idea to do a quick check now to ensure that you have the paperwork you need at tax time. You won't receive some tax documents, including Forms W-2 or 1099 for income you received, until early next year. In the meantime, though, make sure you have receipts to back up anything that will be covered on your tax return, including business-related, medical or childcare expenses you are planning to deduct.
If you have purchased or sold a home, locate all the related documents, because you will also need them at tax time. In addition, if you've experienced casualty losses, moved for business reasons or made donations to a favorite charity, find the associated paperwork and add it to your tax file. These are just some of the documents you may need when you file your tax return. Consider meeting with your CPA now to talk about events that have taken place during 2011 that may have tax implications, and learn what paperwork you will need to cover them on your tax return.
Get your investment portfolio in order
This has been a roller coaster year for the stock market and other investments. Given the market ups and downs, you may find yourself with unexpected capital gains or losses. Before the year ends, there may be tax-savvy steps you can take to minimize the tax bite on your investments. Ask your CPA about your options and how to put them to work now.
Pump up your retirement savings. Putting away money for retirement, and making the most of the many tax advantages associated with doing so, should be a top priority. If you get started before year-end, you may be able to chalk up some tax savings right away. Remember also that virtually all of your retirement savings choices allow you to sock away money that earns income or dividends tax free. Your CPA can help you determine the right retirement options given your financial and tax situation.
Take advantage of "green" tax breaks
Intrigued by the new electric cars on the market? You could get a tax credit of up to $7,500 for buying one. For a low-speed electric vehicle, think street-legal golf carts and mopeds, there are credits of up to $2,500 if you make a purchase before year-end. You could also receive a credit of up to $500 for certain environmentally-minded home renovations, including insulation and energy efficient windows, heating or air conditioning systems. Similarly, there's a tax credit of up to 30 percent of your expenses if you install solar heating to generate electricity or heat water. Installing a geothermal heat pumping system will also get you a tax credit worth 30 percent of your costs.