As we rush around getting last minute gifts, we should also be mindful of the end of the year for tax reasons. Here are a few items to check off your list before 2012 rolls around.
- Last Minute Charitable Contributions: Time to get in the last minute charitable contributions for the 2011 tax year. Is it time to clean out your closet and make a donation to Good Will? Can you afford to give a little extra to a charitable cause? It has been a rough few years for a lot of people and your donation may be just what your favorite charity needs to help those in need.
- Unreimbursed Medical and Dependent Care Accounts: These are your "use it or lose it" accounts. You have to use the money by the end of the year or you forfeit your balance. If you have money in these accounts, maybe it is time to get your eyes checked or a new pair of glasses. Make sure you have paid all of your dependent care expense and that your balance is zero.
- 529 or Educational Savings Deposits: In some states, your contribution into an educational savings account or 529 plan is a deduction on your state taxes. Do you need to add a little more for next semester's U-bill? Consider adding a little more to receiving the deduction?
- Taxes: Do you have any tax bills due in December or January? These bills might be deductible on your taxes. You might consider paying your January taxes in December to take advantage of the deduction.
- Medical and Dental Expenses: Did you have a lot of medical expenses this year or are you going to have medical procedures next year? You may be able to deduct medical expenses on your taxes if the amount is greater than 7.5% of your adjusted gross income (AGI) and you itemize your taxes. A little tax planning can save you a lot of money.
- IRA Contributions and Future Tax Planning: You have until April 15, 2012 to maximize your IRA contributions. However, an IRA or 529 contribution to someone else might be a great last minute Christmas gift.
We wish you and your family a great and save safe holiday season. As always, check with your tax professional to see what strategies work best for your individual situation.
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