Tax Tips for 2011
Donate Appreciated Stock instead of cash to your favorite charity - This will allow the taxpayer to take a deduction for the future market value of the stock without recognizing the gain as income.
Evaluate the ability to take Itemized Deductions vs. Standard Deduction - If the taxpayer is marginally around the Itemized Deduction amount, utilizing a strategy for bunching deductions into a single year and taking the Standard Deduction in the alternate year will result in tax savings when the two years are looked at as a whole. Similarly the same strategy may apply to deducting Medical Expenses when compared to the 7.5% AGI floor.
Harvest tax losses on stock holdings that are trading below the original investment to offset capital gains realized year to date and/or create a capital loss of up to $3,000. The investor needs to be mindful of the 90 day wash rule that requires them to not repurchase the stock for 90 days in order to claim the loss.
Did you move to be closer to work or to take a new job? If your new residence is at least 50 miles closer to your workplace than your old home, you may qualify for a deduction of your moving expenses.
Did you adopt a child? There is a special refundable tax credit for which you may qualify. The credit can reimburse up to $13,360 of qualified adoption expenses.
Are you a student or the parent of one? If so, you have a choice of credits. You may be able to receive up to $2,500 per student.
Do you donate to charities or religious organizations? Whether you contribute money or goods, you may be able to deduct the value of your donations. Be sure to get receipts for any donation worth over $250. You may also deduct a certain amount per mile driven in service to a charitable organization.
Health-care credits: The Small Employers Health Care Tax Credit is applicable to small-business owners for tax years 2010 through 2013. It is aimed at businesses with fewer than 25 employees, for whom the average salary per employee is under $50,000. The credit equals 35 percent of health-care premiums paid by the company.
If you use your car for business, or your business owns its own vehicle, you can deduct some of the costs of keeping it on the road. You may either keep track of and deduct all of your actual business-related expenses (fuel, etc.), or use the standard mileage method and deduct 51 cents for each mile driven, plus all business-related tolls and parking fees.
Businesses can write off the full cost of some assets in the year they buy them, rather than capitalizing them. Section 179 of the Internal Revenue Code allows you to deduct up to $500,000 of the cost of new equipment or other assets in 2011. This is subject to a phase-out if you place more than $2 million of equipment in service. Some assets don't qualify for this Section 179 deduction, including real estate, inventory bought for resale, and property bought from a close relative. The annual deduction amount goes down to $139,000 in 2012.
There is also a first-year bonus depreciation deduction in effect for 2011. This special deduction allows taxpayers to depreciate 100% of the adjusted basis of qualified property during the first year the property is placed in service. This deduction changes to 50% for 2012.