Year-End Strategies For Individuals | Tax Tip of the Week | No. 118
Year-End Tax Planning-Part 2
The following is a summary of actions to consider as 2011 draws to a close. To read a more detailed discussion of these items click here. - Accelerate or defer compensation or billings depending on your 2011 and 2012 earnings expectations.- Consider your short-term and long-term capital gains rates. Be sure to include any prior year capital loss carry-forwards.- Look closely at any installment sales (Example: Selling home on land contract) to determine the effect on current and future years. - Use credit cards to pay for tax-deductible expenditures—including charitable deductions in 2011. You will get the deduction this year even if you don’t pay for it until 2012. - Consider any suspended passive activity losses you may have. - Make charitable contributions from your IRA. If you are over 70.5 and have required minimum distribution requirements this is an especially strong planning tip. (Note: This provision is set to expire on 12/31/2011). - Look at contributing appreciated assets to fulfill charitable obligations. - Install energy-efficient home improvements to receive tax credits. (Note: You need to look at any credits you took in 2009 or 2010 to see if you still qualify). - There are several tax credits available for fuel-saving or alternative-fuel technology vehicles. - Try to maximize the zero percent capital gain and dividend income you may qualify for in 2011. - Pay any fourth quarter state or city estimated tax payments in 2011 if you can itemize your deductions. - Always factor in any potential Alternative Minimum Taxes (AMT). An increasing number of middle-income earners and retirees are being subjected to the AMT. - Consider maximizing your retirement plan and/or IRA contributions. - See if making a ROTH conversion makes sense for you this year. - This is a good time to reevaluate, or establish, your estate plans. The current estate exclusion is $5 million but the future still remains unclear. - A part of your estate planning may include some gift planning. The annual gift exclusion remains at $13,000. These are just a few ideas to consider. Give us a call if you would like to schedule a year-end planning meeting. Let us know if you have any questions.
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