Great tax tips to do before 12/31/11>10 Tax Deductions to Squeeze In Before 2012 - Yahoo! Finance
I came across this article today and tweetted it. With, believe it or not only three weeks from tomorrow until the end of 2011, here are some great tips on what to do to get in the last second tax benefits associated with them.
10 Tax Deductions to Squeeze In Before 2012-From Main Street
The end of the 2011 is just around the corner, but there’s still time to save on your taxes. I have compiled a list of payments you can make this December to increase your 2011 tax refund or reduce your 2011 federal, and perhaps state, income tax liability.
A few things to keep in mind: You can use a bank credit card to buy deductible items in December and be able to deduct them on Schedule A. Also, the first seven items apply only if you will be itemizing deductions for 2011, so make sure you will be able to itemize before making any payments.
Cram in Medical Appointments
Time to cram in those trips to the doctor. The Internal Revenue Service lets you deduct your yearly medical costs as long as they exceed 7.5% of your 2011 adjustable gross income – a high percentage, but one you can meet by refilling your prescriptions, scheduling check-ups, eye exams and doctor visits, stocking up on deductible medical supplies and paying any outstanding medical bills this December. Also, don’t forget to keep track of your round-trip mileage when driving to medical appointments.
Do you make direct monthly payments of health insurance premiums, or is your long-term care insurance up for renewal next month? A good tip is to make the January payment in December.
Make a State/Local Income Tax Payment Early
Are you making quarterly state estimated tax payments, deducting state and local income tax and not state and local sales tax? If so, make the fourth-quarter payment that is due Jan. 16 in December.
If you expect to have a balance due on your 2011 state income tax return, you can ask your employer to increase your state income tax withholding.
If you make the decision to deduct state and local sales tax instead of state and local income tax, or if your state does not have an income tax and you were planning to buy a new car, truck or motorcycle in early 2012, make the purchase in December. In fact, you may actually save money on a year-end deal.
Many taxpayers do as I recommend and save all of their sales tax receipts during the year to see if it would be worthwhile to deduct actual state and local sales tax instead of using the Optional State and Local Sales Tax Table. If you will be deducting state and local sales tax, and the total tax from your accumulated bills will exceed the amount allowed in the table (you can use the Sales Tax Calculator tool on the IRS Web site), buy big-ticket items that are scheduled for purchase in early 2012 before the end of December.
Pay Real Estate Taxes Early
In some states, real estate taxes are billed once a year, with perhaps separate billings for municipal, county and school taxes. In others, inlcuding my home state of New Jersey, the taxes are combined but you are billed quarterly.
Make payments due early in 2012 before the end of December. In New Jersey, the first-quarter payment for the year is due Feb. 1, so I tell clients to send their check before Christmas.
Pay Mortgage Interest Early
In most cases your monthly mortgage and/or home equity loan payments are due during the first week of the month. Make the January payment(s) before the end of the month and make sure the bank or mortgage company gets the payment in December so the additional interest payment will be reflected on your 2011 Form 1098.
Make Some Charitable Contributions
Doing good can be good for your wallet, too, since you can write off your charitable contributions.
Add your favorite church and charities to your Christmas gift list and donate used clothes, books and household items to the Salvation Army, Goodwill or a similar organization. Just be sure you make a list of the items you are donating and get a receipt from each organization you give to.
Don’t have the cash available to make the contribution? You can donate stock or mutual fund shares that have appreciated in value to a church and charity and claim a deduction for the fair market value of the investment on the date of the contribution. Keep in mind that you don’t have to report the capital gain as income on your tax return, and be sure not to contribute an investment that is worth less than when you paid for it.
Buy Some Work Essentials
Business owners aren’t the only ones who can deduct work-related expenses – employees can, too, if the expenses exceed more than 2% of their adjusted gross income.Buy uniforms (or have your existing uniforms dry-cleaned) and deductible work clothes, small tools and supplies now; attend a work-related conference, seminar or workshop; and renew subscriptions to job-related and investment publications that will expire early next year. If your annual safe-deposit box fee is due in January, pay it in December. Also, if you use tax software to prepare your returns (not that I recommend doing this), buy the updated package before year-end.
Prepay 2012 College Tuition and Fees
If you have not made enough qualified payments in 2011 to claim the maximum deduction or credit allowed for your level of income, you can send the college a check for the first semester of 2012 in December.
Make Your Home More Efficient
Have you taken steps to make your home green? If so, this credit is for you. The IRS considers qualified energy-efficiency improvements to be insulation, energy-efficient exterior windows and doors and certain roofs, though the cost of installing these items does not count and the deduction for windows is limited to $200. The credit also applies to the cost, including installation, of residential energy property such as high-efficiency heating and air conditioning systems.
If you haven’t already claimed at least $500 in energy tax credits on prior years’ tax returns, you can claim a credit of 10% of the cost of qualified energy-efficient purchases and improvements to your principal personal residence. The maximum credit is $500.
Also important: When buying, be sure to get a “Manufacturer’s Certification” from the seller.
Make Needed Repairs to Income Properties
If you own rental real estate, such as a two-family home or vacation property, make needed repairs, buy supplies and make payments for the property this month and fill up the oil tank before year-end.
You can also prepay real estate taxes, utility bills, insurance premiums and any January 2012 mortgage payment.
2) In the Markets today:
US stocks rose as the euro zone's plan to fix its debt crisis overshadowed some disappointing corporate forecasts.
Dow Gains for Second Straight Week-From The Wall Street Journal
Stocks wrapped up their second straight week of gains as the euro zone's latest plan to fix its debt crisis overshadowed some disappointing forecasts from big U.S. companies.
The Dow Jones Industrial Average advanced 186.56 points, or 1.6%, to 12184.26, undoing most of the previous day's losses. The Standard & Poor's 500-stock index climbed 20.84 points, or 1.7%, to 1255.19, and the Nasdaq Composite advanced 50.47 points, or 1.9%, to 2646.85.
The advance was led by financial stocks. J.P. Morgan Chase gained 3%, Bank of America added 2.3% and Morgan Stanley climbed 3.2 %. Holding back some of the Dow's gains was DuPont, which fell 3.2% after the chemical company revised its full-year 2011 earnings outlook to a range that was below analyst expectations.
With Friday's gains, the Dow logged a weekly gain of 1.4%, adding to the previous week's 7% rally. The Dow is up 1.2% this month and 5.2% for the year.
Friday's move came after the 17 countries of the euro zone, overriding opposition from the U.K., formally agreed to run only minimal budget deficits in the future and allowed the European Court of Justice the right to strike down national laws that don't enforce such discipline, a major transfer of national sovereignty over budget policy.
While details of the agreement were scarce, leaders agreed to cap the European Stability Mechanism at €500 billion ($667.05 billion), and that EU nations would provide up to €200 billion in loans to the International Monetary Fund to increase its funding ability.
In Europe, the Stoxx Europe 600 reversed losses to gain 1.2%, while France's CAC-40 index rose 2.5%. In the U.K., which didn't agree to the new fiscal rules, the FTSE 100 advanced 1.2%.
Ten-year bond yields for Italy, Spain and Greece fell across the board, with the yield spread narrowing with German bonds, according to Tradeweb.
Gold rose 0.2%, to $1,712.80 a troy ounce, while crude-oil prices rose 1.1%, to $99.41 a barrel. The U.S. dollar was weaker against the euro and the yen. Treasurys fell, sending the yield on the 10-year note to 2.056%.
In U.S. economic data, the trade deficit narrowed in October for the fourth month in a row, as oil exports helped to offset record imports from China. The October deficit was smaller than Wall Street expectations. Separately, an early reading on consumer sentiment in December topped expectations.
In corporate news, General Electric gained 3.3%. The conglomerate raised its quarterly dividend for the fourth time in two years by two cents, to 17 cents a share, citing continued strengthening in its financial performance.
Texas Instruments reversed losses to edge up 0.1% after the chip maker lowered its fiscal fourth-quarter earnings and revenue outlook, citing lower demand across a wide range of markets, customers and products. Fellow chip maker Altera also managed to gain, climbing 1.2% after cutting its forecast for fourth-quarter revenue, citing a deteriorating outlook across all major markets, including both large and small clients. Lattice Semiconductor fell 3.8% after the company cut its projections, citing softening demand.
Comverse Technology gained 6% after the customer management software company reported better-than-expected fiscal third-quarter earnings and revenue.
Blue Coat Systems soared 44% after the network optimization software company said it agreed to be acquired by private-equity firm Thoma Bravo in a deal valuing the company at about $1.3 billion.
3) Top financial story of the day:
Europe's Leaders Agree to Repair Flaws in Currency, but Bold Strokes Missing.
Europe’s Latest Try-From The New York Times Editorial
We’re losing count of how many European Union summit meetings have ended with “historic” agreements to contain the euro-zone debt crisis only to see them fall apart as markets judged they were inadequate or irrelevant to the problem of making good on old debts and generating enough growth to pay off future obligations.
We are not optimistic that Friday morning’s agreement on a “new fiscal compact” for the euro-zone will now break that cycle.
The agreement — all 17 members that use the euro have agreed to sign it — is built around Germany’s demand for legal commitments to maintain fiscal and financial discipline. In the long-term, more discipline and coordination and more financial transparency are good things. But a pact that binds all members to more austerity in a time of recession is exactly what Europe does not need right now. The agreement will also increase the money available for future bailouts. But the amounts are still far too small to persuade investors that Europe is prepared to back up much larger economies like Italy and Spain. And it still leaves the euro zone without a lender of last resort, like America’s Federal Reserve, to defend vulnerable countries and banks from market panic.
The pact will prove worth the effort only if it persuades the European Central Bank to assume that role. Statements earlier this week by the bank’s president, Mario Draghi, are not encouraging.
Germany wanted all 27 European Union members to join the fiscal pact. But Britain, Europe’s third-largest economy after Germany and France and ever ambivalent about the union, refused to go along. Britain has stayed with the pound, so its refusal will not make much practical difference on fiscal policy. But it could isolate Britain and weaken the European Union as a whole.
Europe has learned the hard way that sustainable monetary union requires better coordination of national fiscal policies. Greece wrecked its finances by overspending, undertaxing and falsely reporting its budget numbers. But major leaders, especially Chancellor Angela Merkel of Germany, still refuse to acknowledge that coordination isn’t enough.
Without crisis-management mechanisms like fiscal transfers from richer to poorer members and a central bank willing to be a lender of last resort, financial crises can leap borders and doom the whole euro zone to recession.
Other euro-zone members currently under market attack, like Italy and Spain, have manageable deficits. Austerity will only make their problems worse. They suffer mainly from high borrowing costs, weakened banks and faltering growth. Their immediate problem is the high interest rates produced by Europe’s mismanagement of the Greek crisis. If the European Central Bank bought enough bonds to drive their interest costs to precrisis levels, their deficits would quickly start to evaporate.
If Germany were willing to do its own part by buying more from its weaker neighbors — and stopped insisting that austerity is a one-size-fits-all-conditions answer — all of Europe, as well as the United States, would have better chances of restoring robust growth. That would really be a “historic” solution to the euro-zone crisis.
Success is not final, failure is not fatal: it is the courage to continue that counts. — Winston Churchill
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