Tax Planning for Year-End 2010

Can you believe 2010 is almost over? We only have about 5 weeks left in the year for tax planning! Here are a few things to consider:

1. The Residential Energy Credit expires this year, so if you’re thinking of making your home more energy-efficient, you have 5 weeks to complete the project.

2. If you gave $250 or more to a charity, you will need a receipt or acknowledgment in order to take the deduction. A cancelled check won’t do.

3. If you’re a self-employed, cash basis taxpayer, review your financial statements to determine if you need to make some purchases (equipment, office supplies, etc.) this year, or wait until 2011.

4. Are you, or do you have a dependent child in college? While you can still take Education Credits for tuition and fees, 2010 is the last year that you can also include “Course Materials” (i.e., books, supplies and any materials required to sucessfully complete the course). Plan accordingly.

5. If you’re self-employed and file a Schedule C, make sure you tell your tax preparer how much you  paid in health insurance premiums in 2010. For tax year 2010 only, premiums paid for self-employed health insurance are not only tax deductible, but they reduce actual business income, resulting in lower self-employment taxes.

6. Consult with your tax professional to help you with your tax planning and to answer additional tac questions.

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