2011 is quickly coming to a close. With a few days left in the year, the IRS has released some last minute tax tips that can help you gain a little tax relief and reduce your taxes! It is recommended that you take action on these tips no later than December 31st to claim most tax benefits so please keep that in mind as you read through these tips provided by IRS.gov:
1. Make Charitable Donation: Your donations must be made to qualified charities no later than Dec. 31 to be deductible for 2011, if you itemize your deductions. You must have a credit card statement or a written other written statement from the charity, showing the name of the charity and the date and amount of the contribution for all cash donations. This can also include a cancelled check or a bank statement.If you donate clothing or household items, they must be in good used condition or better to be deductible.
A good tip to note: If you charge a charitable donation to your credit card on or before December 31 and don’t pay the bill until 2012 you are qualified for the tax relief.
2. Install New Energy-Efficient Home Improvements: By installing energy saving and green energy home improvements such as new insulation, new windows and water heaters to your main home you can get up to $500 in tax savings this year. Check out the Residential Energy Efficient Property Credit if you plan on going green. The credit equals 30 percent of the cost of qualifying solar, wind, geothermal or heat pump property. Visit the IRS.gov site for more info on home energy credits.
3. Portfolio Adjustments: Now is the time to check the gains and losses on your investments and make decisions on whether you want to sell or not. You may normally deduct capital losses up to the amount of capital gains, plus $3,000 from other income. If your net capital losses are more than $3,000, the excess can be carried forward and deducted in future years. You have until Dec. 31 to make your sales.
4. Contribute to you Retirement: Deferrals made to 401-(k)s or similar workplace retirement programs must be made by December 31. However, you have until April 17, 2012 to open a new IRA or to contribute money to an already existing IRA and still have it count toward 2011.
Normally you can contribute up to $5000 to a traditional Roth IRA and up to $6000 if you are over 60. To learn more about the types of credits and tax relief savings available by contributing to your retirement visit the IRS site.
5. Make a Qualified Charitable Distribution: The QCD, or qualified charitable distribution is a great way to donate to a charity while also getting some great tax relief. If you are age 70.5 or older, the QCD allows you to make a distribution directly from your individual retirement account and paid to the account of a charity, and exclude the amount from gross income. $100,000 is the maximum annual exclusion for QCDs . This benefit is available even if you do not itemize deductions. To learn more to about Qualified Charitable Distribution go to the IRS.gov site.
6. Small Business Health Care Tax Credit: If you are an employer with a small staff who pays at least half of your employee’s health insurance premiums you may be qualified to receive a tax credit up to 35 percent of the premiums you have paid. Learn more about the Small Business Health Care Tax Credit on the IRS.gov site.
To keep yourself out of tax problems or back taxes with the IRS it is important to stay educated on tax relief tips and the latest tax news.
More Tax Help, IRS News and Tax Relief Tips:
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