Last Minute Tax Tips

Final considerations before we ring in 2012

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It’s not too late for 2011 tax planning. There are still a few things to consider before the ball drops in Times Square. The goal of tax planning should be to reduce your tax burden for both 2011 and 2012 by structuring your income and deductions over both years. Keep in mind that the Alternative Minimum Tax (AMT) relief is scheduled to expire along with 2011 (see AMT Relief Ending, October 14, 2011). Congress has been extending the relief each year, but no one knows if this will happen in 2012.

Taxpayers who itemize deductions can begin with their charitable deductions.

  • Charging a contribution to your credit card will permit the deduction this year even though you won’t pay the credit card bill until next year.
  • Writing a check to a charity this year and mailing it will also result in a current year deduction.
  • Those who make state estimated tax payments should send the fourth quarter estimate by year-end to take the deduction in 2011.
  • January mortgage payments can be made in December to get the extra interest deduction in 2011.

Investors should also review their portfolio for last-minute tax planning. Start by reviewing your current investments to determine if you have any unrealized losses. Losses cannot be taken on your tax return until they are realized (see Tax Loss Harvesting, November 29, 2011). A thorough review of your investments would take into account existing realized gains and losses and any loss carry forwards from prior years. The final step should be a projection of taxable income for 2011. Long-term capital gains are still taxed at 0% for taxpayers in the 10% and 15% bracket. It probably doesn’t make sense to harvest losses to shelter income that wouldn’t be taxed. This is not always the case if you are drawing Social Security benefits. A reduction in taxable income could make less of your benefits taxable.

Will Your Money Last Through Retirement?

No one wants to run out of money. But without goals and a solid plan,
how can you know for sure whether you’re on the right track?

Will I be able to maintain my current lifestyle?

What will my monthly income be in retirement?

Can I protect my hard-earned savings and still
have the income I want?

Rodgers & Associates answers questions like these every day.

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2025 Lititz Pike, Lancaster, PA 17601
Phone: 717-560-3800, Toll-Free: 888-876-3437