How To Make The Most Of Our 2010 Tax Deductions: Defer Income and Accelerate Expenses

2011 may be here already, but that doesn’t mean 2010 tax relief tips can’t be an important educational tool for future 2011 tax filing. Recently I sat down for an interview with Deborah at RTTNews.com to discuss how to make the most of your 2010 tax deductions.

When talking about tax deductions it is always important to remember that consistency is key. As a Certified Tax Resolution Specialist I always advise clients to be consistent in checking for the latest changes in tax laws to keep up to date on the best way to file.  Deductions are a great way to lower your tax liability any year. Check out my interview below to for 2010 tax help answers that easily transition into great tax habits in 2011. And remember to check out our website at taxresolution.com to see great  tax advice on deductions and other tax relief tips.

Listen to the full interview here for more tax help tips or see more posts from the interview “Tax Help for 2011: New Year Incentives You’ll Want to Take Advantage Of” and “News Interview: A Look Back How Tax Changes in 2010 Effect 2011″.

On Maximizing Deductions in 2010:

Deborah: What are some tips to help us maximize our 2010 deductions?

Michael: Some year end tax tips; Any kind of income that you can defer to 2011, you should, any expenses that you can accelerate into 2010 you should as a rule. For example, any mortgage interest make Jan 1st mortgage payment by December 31st 2010, but you gotta remember to add the interest paid on that payment to the bank reported form of the 1098, this was you’ll get 13th month’s worth of a deduction for 2010, but you’ll have to do it again at the end 2011, otherwise you will only get 11 months of a deduction.  So you must remember to do it year after year. Real estate taxes, if you can pay your real estate taxes, usually the second payment is due March or April of 2011, if you can make the payment by Dec. 31st, 2010 you’ll get the full deduction for those real estate taxes. Also, for people who are self employed, they should not send out their invoices for December until the end of December so the people  they are sending them to can pay them in January. There by deferring that income. Most independent contractors are sole proprietors  and they are on a cash basis of accounting for tax purposes, so it makes sense to  again to defer income and accelerate expenses.

Deductible Purchases for Your Home, Energy Efficient Incentives vs. Capital Expenses:

D: Now how about anything that we purchased for our homes? Big purchases, either that we made at the beginning of the last year, and didn’t take advantage of,  or something that we know coming up. Should we hurry and put those new furnaces in before the end of the year even though we know it might stretch our budgets a little bit?

M: Only if you are getting an energy type tax credit. Let me say to all of your listeners, major capital improvements like a furnace or a roof is not a tax deductible expense. Where it comes in handy is when you sell your home it will reduce the gain on the sale, in other words, anything that has a useful life of more than 12 months is considered a capital expense, so a furnace, which should last 10-15, 20 years, is not a tax deductible expensive in the period in which it was paid for but it will get added to the basis of house, it gets added to the original cost of what you paid for the house, so it reduces the gain when you sell that property.

D: So only if it is more energy efficient, this year, can we get that incentive, but not the actual purchase itself?

M: Correct.

How to Educate Ourselves On Current Tax Laws:

D: 2010 was a very unique year. Many taxes expired, for instance, the estate tax. How can we become aware of all of the exemptions available to us?

M: Well, one good place to look is obviously on the internet. There are a lot of good sites these days, like; MSN Money, AOL Money, under the tax tab they have a lot of folks that will list the year end tax tips. We also have them our website. If you go to taxresolution.com you’ll see the yearend tax tips on our blog and on our website, so folks can get them there too.

Michael Rozbruch, CEO of Tax Resolution Services, Co., is a Certified Tax Resolution Specialist. If you owe $20,000 or more to the IRS or have 3+ years of unfiled tax returns, call our office today at 1-888-699-7630 or visit www.taxresolution.com and receive a free, no-risk tax resolution consultation.

More Tax Help, IRS News and Tax Relief Tips:

  1. Tax Resolution After Receiving IRS Audit
  2. Don’t Settle for a Busy Signal if You Need Tax Help: IRS Can Only Service 70% of Taxpayer Phone Calls
  3. Ask the Certified Tax Specialist – Small Business Back Taxes
  4. Tax Resolution Services Offers Returning Veterans Free Tax Advice
  5. RTT News Interview: A Look Back How Tax Changes in 2010 Effect 2011

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