From Carol McAtee’s CPA firm in St. Petersburg, FL- The end of the year is near, but there is still time to consider the following items to save money on taxes or help make things easier in the new year. Remember, taxpayers can use credit cards to pay for deductable items purchased in December. The first four items below apply only to taxpayers that itemize.
1. Schedule medical appointments. Taxpayers can deduct yearly medical costs as long as the total of the costs exceed 7.5 percent of Adjusted Gross Income. Refilling prescriptions, scheduling check-ups, eye exams, purchasing deductable medical supplies, and paying any outstanding medical bills in December will increase your deduction. Mileage driven to medical appointments is also deductable, so keep track of it.
2. Pay real estate taxes. Pay any currently due real estate taxes by year end. Also, make payments due early in 2012 before the end of December.
3. Pay mortgage interest early. In many cases, mortgage or home equity line payments are due the first week of the month. Make payments due in January before the end of December and the additional amounts of interest can be deducted for 2011.
4. Make charitable contributions. Taxpayers can add their favorite church and charities to their Christmas gift list and make cash donation before year end. Also, donate unused clothes, books, and household items to the Salvation Army, Goodwill, or other similar organization. Be sure to get a receipt from each organization that items are donated to and make a list of all items donated.
5. Make your home more efficient. The costs of certain qualified energy efficient improvements, such as insulation, exterior windows and doors, and some roofs, can qualify for a tax credit. The cost of installation does not qualify for the credit. Taxpayers, who have not claimed at least $500 in energy tax credits on prior returns, can claim a credit of ten percent of the cost of the qualified energy efficient improvements made to their principal personal residence. The maximum credit is $500. Ten percent of the cost, including installation, of residential high efficiency heating and air conditioning systems can also be included in the credit.
6. Make needed repairs to rental properties. Taxpayers who own rental real estate can make needed repairs, buy supplies, pay utilities and taxes, and any January mortgage payment before year end to increase deductions.
7. Change important passwords. For extra security to sensitive personal information, taxpayers should change their passwords at least once a year. The best passwords contain a mix of numbers, letters, and special characters. Remember, length is generally more important than complexity.
8. Digitize documents. Taxpayers can transfer the contents of their filing cabinets and drawers to the computer, allowing better organization of important documents and saving space. All that’s needed is a simple document scanner. Be sure to keep backups of documents.
Avoid late filing fees and penalties and insure all allowable deductions are considered by hiring a tax professional. McAtee & Associates can help both individual and business taxpayers with all their tax matters.
ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN.
