Time To Start Tax Planning for 2011

There are only 2 months left in 2011– can you believe it? Before you know it, you’ll be receiving your tax letter from your tax preparer; tax documents will be coming in the mail (W-2’s, 1099’s, etc.), and you’ll be organizing your papers for your 2011 tax return. Before year-end is a great time to review your financials, so that your 2011 tax return won’t have you in shock or regret:

1. Check your Federal and State withholdings or estimated tax payments to make sure you’re having enough withheld, depending on your income.

2. If you’re a business owner, review your year-to-date financial statements to determine your estimated net profit; then review the tax implications with your tax preparer. If you’re a cash-basis business and wish to reduce taxable income, consider purchasing supplies and equipment (where you can take advantage of the Sec. 179 deduction or bonus depreciation), or prepaying next year’s insurance premiums.

3. If you’re thinking of starting a retirement plan, now is the time to set one up for 2011.

4. If you have a Health Savings Account, did you pay into it yet? For an individual plan, you can contribute up to $3,050 to the plan, and get an above-line deduction for the amount.

5. If you wish to donate cash or noncash items to your favorite charity, make sure you do it by the end of the year. Also, if you contribute $250 or more to a single charity, make sure you get a receipt.

6. If you need additional Itemized Deductions for 2011, consider paying the 2012 property tax installment in 2011.

7. If you have a dependent child in college, consider paying for the upcoming semester now, as well as for fees and course materials.

If you have any questions on tax-planning, please contact me!

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