Better now than December 31…
Passing along an opinion piece published on the SouthBend Tribune website, here is a quick list of “Tax ToDo’s” before the end of the year. Here is an annotated list from their posting.
- This is the perfect time to collect what you don’t need or want and make a donation to your favorite charity organization. IRS Publication 526, Charitable Contributions and Publication 561, Determining the Value of Donated Property are your best references. You will need to complete IRS Form 8283 for non-cash contributions. Remember that cash or property contributions of $250 or more will need a WRITTEN receipt that includes both value and description of the donated property. Organizations like Goodwill Industries, the Salvation Army, and local groups recycle many contributions. You add value to what you don’t need or want as a personal tax deduction, employment for charity workers, and either free or affordable gifts to those who are suffering hard times in this economy. Bring your donations to these organizations BEFORE Thanksgiving and don’t forget to keep your receipts.
- There is still time to consider residential energy efficient property credits. Thanks to the American Recovery and Reinvestment Act of 2009, you could lower your tax bill by investing in energy-efficient products. The IRS provides a checklist of candidate investments from exterior windows and water heaters to plug-in electric cars. The SouthBend Tribune posting suggests significant tax savings up to $1,500 on 2009 taxes; credits can be based on as much as 30 percent of the price for new energy-efficient appliances and materials.
- Finally, when managing your budget, consider strategic tax planning. Plan major purchases just like you were running a small business, in advance! Carefully consider current year federal (and state where applicable) tax advantages. If you need to purchase a large appliance or a new car, and you itemize your deductions, consider the effect your state’s sales tax will have on your federal deductions. Similarly, if you have any surplus income, take time to evaluate advantages of investing in a longer term individual retirement arrangements (IRS Publication 590) AND the Retirement Savings Contribution Credit, IRS Form 8880.