Seven Tax Planning Strategies That Could Save You Thousands In 2010
Planning ahead to make filing your yearly taxes isn't all fun and games
. We've comprised a list of seven tax planning strategies that could help you save thousands of dollars in 2010. After all, saving money, and knowing what to provide your accountant is valuable information for everyone.
If you set out to search for ways to save money generally you can find them. However, you must do them in order to potentially save thousands of dollars. It's essential for all tax payers to plan and have a strategy in place when it comes to filing taxes. This year there are several ways to save big.
IRAs: What You Can Do With Them This Year
Converting a traditional IRA to a ROTH IRA this year may be a good strategy if you believe taxes will continue to rise. ROTH IRA's give you the option to not have to pay taxes on your financial IIRA gains ever again. 2010 is a good time to convert your IRA's because this year there aren't any income limitations as was true in the past. You can defer the tax for two consecutive tax periods.
Homebuyer Credits, Do You Qualify?
Talk to your accountant about the advantages of homebuyer tax credit if you purchased a new home or plan to before June 30, 2010. You must sign a contract by April 30, 2010 and close by June 30, 2010. This is a tax credit of up to $8,000 for first time homebuyers.
Existing Homeowner Credit
First time home buyers aren't the only homeowners eligible for big savings in 2010. $6,500 in tax credit is available to existing homeowners who purchase a new home. If you have owned your home for 5 o 8 years, you can qualify.
There are a few restrictions regarding income levels and the amount of property owned. Discuss the existing homeowner credit with your accountant if you feel you may qualify. The same deadlines apply to this tax credit as the new homeowner. A contract must be signed by April 30, 2010 and close by June 30, 2010.
Understand Energy Savings
A 30% tax credit for anyone who took measures to upgrade their home with energy efficient appliances is available this year. Up to $1500 in spending can be credited. Any qualifying windows, energy saving appliances, heating and cooling systems, water heaters, and even light bulbs may help save you hundreds of dollars.
Track Your Expenses
One of the most useful tax planning strategies is to track your spending. Keeping a record of what you spend on a weekly or monthly basis can help with deductions come tax time. There are several software programs that offer professional ways to document and track spending.
Quickbooks and Mircosoft Excel are two popular programs to use. Have an organized filing system for various receipts so you can collect them more easily when it's time to talk with your accountant.
Review Tax Laws
Review tax laws and ask your accountant about anything you don't understand. It is not the IRS's duty to educate taxpayers. Do your research and talk to a tax professional if you have any questions.
Ask Your Accountant
Make an appointment with your accountant to discuss potential tax savings. Give them time to review your financial statements in great detail. Ask if they have any recommendations to help make your bookkeeping and accounting easier or more effective.
Improve Your Financial Situation
Accounts help with much more than tax issues. A great accountant will offer suggestions on financial matters that you may not deem important. Listen to the advice of your accountant and ask for their help creating a tax planning strategy that works for your specific needs.
by: Eugene Cohen, CPA
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