1. Review your portfolio. Consider taking a loss if you have substantial capital gains.
2. Max out your retirement plan contributions. 2011 maximum IRA contribution is $5,000 (plus $1,000 if age 50 or over). 2011 maximum 401(k) contribution is $16,500 (plus $5,500 if age 50 or over).
3. Consider contributing to a 529 Plan if you have children. For example, New York allows a deduction up to $5,000 (or $10,000 for married filing joint filers) for contributions made by an account owner to an account belonging to New York’s 529 College Savings Plan.
4. Use up your flexible spending plan.
5. Save receipts for medical supplies and equipment such as insulin testing supplies, canes, braces, orthotics, eyeglasses, contact lens and hearing aids, etc. Medical expenses that exceed 7.5% of AGI are deductible.
6. If you’re self-employed, stock up on supplies.
7. Prepay your state and/or local taxes.
8. Make charitable donations and be sure to get a receipt. If you are age 70 ½ or over and have an IRA, consider a direct transfer to an eligible charity of up to $100,000 per year. Such a transfer is not taxed and may be used towards your required minimum distribution for the year.
9. Save receipts that include sales tax on big ticket items, such as a car, boat, etc.
10. Save receipts for job search expenses, if you looked for a job in your present occupation. Resume preparation and mailing and travel are examples of deductible expenses. The portion of these expenses that exceed 2% of AGI are deductible.
IRS Circular 230 Disclosure
Pursuant to U.S. Treasury Department Regulations, we are now required to advise you that any federal tax advice contained in this communication, including attachments and enclosures, is not intended by the Sender or Sandra G Johnson, CPA, P.C. to constitute a covered opinion pursuant to regulation section 10.35 or to be used for the purpose of (i) avoiding tax-related penalties under Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any tax-related matters addressed herein.