How to Save on Taxes This Year

Posted by Madison on October 12, 2010

It’s time to start talking about tax savings! With 4th quarter here, it is time for a reminder on some tax saving strategies, some of which will expire this year.

Saving money on taxes is essentially free money, you just need to remember to claim them when you file! I suggest keeping a running list of the things you did during the year that you will need to remember at tax time.

Here are some reminders to get your list started to save on income tax!

Save on Taxes

  1. Roth Conversion Strategy to Minimize Taxes. With this tax strategy you’ll avoid paying taxes on money you lost, without having to recharacterize the entire conversion, allowing you to keep the conversions on the winners.
  2. American Opportunity Tax Credit Expands Tuition Tax Credit. The tuition tax credit expanded last year. Instead of only claiming the tuition credit for the first two years, you can claim it for 4 years again in 2010.
  3. Making Work Pay Credit. The making work pay tax credit is back again in 2010 and will allow you to save $400 for working individuals and $800 for married couples.
  4. 0% Capital Gains. This may be the last year to take advantage of the 0% capital gains tax rate for people in the bottom two tax brackets. Even if you don’t qualify for the 0% capital gains tax, you will still get the lower 15% capital gains tax during 2010.
  5. Take a Loss on an IRA. If your retirement plans still haven’t recovered and you have substantial losses in your IRAs, there is an opportunity to consider closing them and deducting the loss. It’s not an ideal situation, but it can be right for some people.
  6. How to Claim Your Home Buyer Tax Credit. If you bought a new house earlier this year, it’s finally time to claim your $8000 (or $6500) tax credit!
  7. Solar Energy Tax Credit. The economic stimulus plan lifted the maximums on the solar energy tax credits, making the purchase of solar panels very appealing.
  8. Tax Deductions for the Self Employed. Self employed tax deductions for you to use when filing your federal tax return, or end of year shopping for your business!


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Comments to How to Save on Taxes This Year

  1. Hi Madison,
    My husband and I are both employees of our own C Corporation (a very small start up). I’ve just learned that we are allowed to deduct childcare and healthcare as business expenses, as well as gas, auto loan payments, etc. It would be useful to read a blog post about “Tax deductions for the C-Corp self employed”… 🙂

    Vale

  2. I like your list because it emphasizes permanent tax savings rather than timing differences. For example, on similar lists there are sometimes those who advise paying your January mortgage bill in December in order to get an extra month of mortgage interest as a deduction. While there are limited situations where such a strategy could make sense, for most people it’s an unhealthy form of borrowing. Such a strategy effectively takes next year’s deduction this year, thus trapping people in a perpetual cycle where they have to make that extra payment in December in order to stay even.

    Money for Regular People

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