March 1, 2013
As 2010 comes to close it is a good idea to evaluate tax breaks that you may still be able to take advantage of. We have selected and listed some tax breaks to consider but we recommend conducting a review with a CPA or tax professional.
1. Green Home Improvement Credit
You can receive a tax credit for making certain green home improvements through the end of 2010. You can get a 30% tax credit, up to $1,500, for making small energy efficiency upgrades such as adding insulation, replacing windows, getting duct seals and adding energy efficient doors. If you do a major upgrade, such as solar panels or a wind turbine, you can obtain a 30% tax credit with no limit to how much.
Also check with your state government, as some states have their own tax credit programs related to energy efficient home upgrades.
2. Sell Investments for Long-Term Capital Gains
If you’ve been hanging on to some investments, and you are contemplating selling them, now might be a good time. Through the end of 2010, there is no long term capital gains tax for those in the 10% and 15% tax brackets. For everyone else, capital gains top out at 15%. Next year though, capital gains tax might increase up to as high as your marginal tax rate!
3. Add More Into Your Retirement Account and Health Savings Accounts
If you have a traditional IRA or a regular 401k, it might be a good idea to put a little more in. The money is pre-tax, which amounts to a tax deduction. If you do not have a retirement account, it might be a good time to open one — and get your tax deduction. It is important to point out that contributions to mostHealth Savings Accounts are deductible as well.
4. Home Buyer Tax Credit
Don’t forget that the home buyer tax credit is available if you bought a home earlier this year. You can receive up to $8,000 if you are a new home buyer, or $6,500 if you are an existing home owner. If you bought a home by April 30, 2010, you should be searching through your paperwork, and determine if you are eligible for this tax credit.
5. Charitable Giving
If you want to decrease your taxable income this year, you can give some money away to charity. This is an excellent way to find a tax break if you itemize. Combined with other deductions, such as mortgage interest rate, your charitable giving can be a substantial bonus. Consider donating money to your favorite charity. You can also donate items in good condition. Make certain that you get a receipt though because you will need it in order to verify your donation.
You can also donate stock to charity. If the stock has appreciated in value, you get a tax deduction, and you won’t have to pay taxes on the gains. You can donate losing stock as well, but in those cases you are often better off simply selling the stock and getting the tax break for a losing investment, and then giving the money to charity and taking the donation deduction.
Consult with a Tax Expert. We recommend that you consult with a CPA or tax attorney to see if there are other ways you can save on your taxes. Now is a good time to be planning for the following year.