Now
that the holiday season is here, it may be more challenging to devote the
amount of time you need to financial planning. However, since opportunities are
present this time of year to minimize your taxes and increase your savings, it
is important to take time to make yourself aware of the year-end deadlines.
Here are some tax deductions and actions you can take now that will benefit you
after the holiday season:
-
New car sales tax deduction. You can deduct state and local sales tax paid on a
new car purchased between February 17 and December 31 of this year, regardless
of whether you itemize. There are some limitations related to the price of the
car and gross income, but despite these limitations, this type of deduction can
still contribute to reducing your taxes.
-
First-time homebuyer tax credit. Since the tax credit has been extended and
expanded, there is now more flexibility. First-time homebuyers and homeowners
who have not owned a principal residence in the past three years may be
eligible for up to an $8,000 tax credit. Existing homeowners who have been
residing in their principal residence for five consecutive years out of the
last eight and are purchasing a home to be their principal residence may be
eligible for up to a $6,500 tax credit. Home purchases subject to a binding
sales contract signed by April 30, 2010 will qualify for the tax credit
provided closing occurs prior to July 1, 2010.
-
Take advantage of stock market losses. The S&P 500 is the most widely
followed index of large-cap American stocks, and it is still down from its 2007
peak, which means that you may have losses in your portfolio. You can use the
losses to offset your gains if you sell a stock, bond, or fund in a taxable
account for less than you paid. If you have more losses than gains, the IRS
will allow you to deduct up to $3,000 in remaining losses from regular income.
The rest can be used on future returns.
-
Replace old appliances. If you’ve been thinking about buying an
energy-efficient appliance, now may be the time to do it. Our government has
allocated millions of dollars in rebates for new, energy-efficient appliances.
Rebates range from $50 to $250, and may begin taking effect before year’s end.
-
Donate to charitable organizations. If you want to deduct charitable gifts on
your 2009 tax return, you will want to make donations to charitable
organizations by the end of December.
The steps you take now to minimize your taxes can provide you with extra money
to increase your savings or pay down any debt that accumulated from the holiday
season.
