2009 Last-Minute Tax Tips

by Dual Income No Kids on December 14, 2009 · 0 comments

While shopping for presents and how to handle the relatives at the holidays may weigh more heavily on your mind, it is also an important time to consider making sure that you make any last minute moves to position yourself for reduced taxes.

Now is the time to look at where you might be able to get deductions and tax credits. Here are a few key areas to keep in mind:

Top off your 401 (k) – If you haven’t scheduled yourself to automatically max out on your retirement, now is a good time to dig deep and see what you can add to your contributions for the year. You must schedule it now to make sure it comes out of your paycheck before the end of the year. If you’ve just started a job, and still have enough in reserves, you can choose to allocate up to your entire paycheck.

Max Out Annual ROTH IRA Contributions – While ROTH’s aren’t tax deductible, they do help you diversify your tax burden by paying now and then not being taxed when you take distributions. Since ROTH IRAs also phase out for single-filers making up to $95,000 or married couples making a combined maximum of $150,000 annually, it is better to contribute in your twenties and thirties since hopefully you’ll exceed that income level later in your career.

Harvest Portfolio Losses – Now is also a good time to consider cashing in on stocks that have performed badly and you don’t expect to come back. Also, if you can’t use all of your losses to offset gains in 2009, up to $3,000, you can carry them over into future tax years.

American Opportunity Credit – It is a tax credit for as much as $2,500, generated by spending on tuition and other education expenses (books, possibly a computer) up to $4,000. Currently this credit is available for 2009 and 2010 to single taxpayers with less than $80,000 of modified adjusted gross income and married couples earning less than $160,000. Amounts paid in 2009 for the spring of 2010 are eligible for a 2009 credit.

New Car Purchases – Taxpayers who buy new car before Jan. 1, 2010, may deduct sales and excise taxes and other fees on as much as $49,500 of the purchase price. This provision has generous phase-outs: It disappears between $250,000 and $260,000 of modified adjust gross income for married couples and $125,000 and $135,000 for singles.

Prepay Property Taxes – If you are looking for ways to offset additional income this year, you might consider prepaying your next property taxes or quarterly estimated taxes. You can then claim these on your 2009 return.

Contribute to State-Sponsored 529 Education Plans – For those of you with children, now is your chance to put a little extra away for your children’s education. You’ll thank yourself by putting a bit more here instead of towards excessive presents.
Consider Gifts of Cash or Securities – For those with a bit more in the bank, you can give tax deductible gifts up to $13,000 to your loved ones.

Happy Tax Savings!

Miel

Get Your FREE Ebook

Screen_shot_2017-09-29_at_3.10.45_pm

DINKS (Dual Income No Kids) Finance focuses on personal finance for couples. While by no means financial experts, we strive to provide readers with new, innovative ways of thinking about finance. Sign up now to get our ebook, "Making Money Tips for Couples" FREE.

We won't send you spam. Unsubscribe at any time. Powered by ConvertKit



{ 0 comments… add one now }

Leave a Comment

Previous post:

Next post: