Life has no blessing like a prudent friend.
I woke up Monday morning, after the wonderful holiday weekend … and I had a realization: there are only FOUR days left in 2010.
Obvious, yes … but it carries implications for your wallet, if you are wise with these days.
For those of my clients and friends who prefer to “do it yourself” (though with THIS tax code, I’m not sure that’s always wise), I’ve put together a brief, and actionable “checklist” to ensure that you’re squeezing every last drop out of the deductions available to you for 2010.
And, on the early note — let me wish you a premature Happy New Year, 2011!
Now, let’s get deducting…shall we?
Very Last-Minute Tax-Reducing Moves for 2010
Because time is short, and some moves do require more than this week to pull off, I’m restricting myself to those items which you can realistically affect before the end of the year.
This will be short, but (hopefully) sweet to your wallet…
1) Make an extra payment on your mortgage
If you own a house, and you can swing the cashflow hit, add an additional payment before year-end, and the interest on that payment will be deductible for 2010. Of course, that means that it WON’T be for 2011, but perhaps you can use this as an “extra” payment … and get ahead of the escrow game.
2) Use Your FSA Funds
Money set aside in a flexible spending account must be spent by the end of the year, else the funds are lost. Some employers allow a 2-and-a-half month grace period. So check with your employer to see what your personal deadline is for utilizing your FSA savings.
3) Make the Switch to a Roth IRA
Roth conversions are taxed in the year the conversion happens. However taxpayers have the option to undo part or all of that conversion by their filing deadline. But in order to retroactively undo part of their conversion next year, they first have to convert this year. So if you are on the fence about converting, consider taking the plunge before the end of the year knowing that you (and/or US) can re-characterize some or all of the amounts early next year.
4) The old standby
You know how I feel about charitable giving by now (I hope). This week, of course, is a big one for non-profits who are the happy beneficiaries of last-minute donations. You can pay early on a monthly gift, or give a lump-sum gift. The purpose (aside from the many, many benefits to the organization, and to you), of course, being to knock you into a different tax bracket, perhaps, or to simply cut your tax bill, regardless of the bracket status.
Now, there are plenty others. But these are the quickest, and the easiest (aside, perhaps, from the Roth conversion — but that can be done quickly).
Do you have others you want to explore? Give us a call (952-445-8753) or shoot me an email, and we’ll help you out.
I’m personally dedicated to the success of you and your family.