Year End Tax Planning Tips Follow Up

The year end tax tips I posted last month overlooked a few potential tax planning tips.  Here they are:

Itemized Deductions

You may be able to save taxes this year and next by applying a bunching strategy to “miscellaneous” itemized deductions, medical expenses and other itemized deductions.

Homebuyer Tax Credit

Since the last article the $8,000 first time homebuyer credit has been extended to homes purchased before May 1, 2010 and the home buyer tax credit has been expanded to certain existing homeowners.

Estimated Tax Payments

If you anticipate a state income tax liability for 2009 and plan to make an estimated payment, consider making the payment before the end of 2009. However, this prepayment of state income tax may not be a benefit if the alternative minimum tax (AMT) applies.

Gift Tax Exclusion

You can save gift and estate taxes by making gifts sheltered by the annual gift tax exclusion before the end of the year. In 2009, you can give $13,000 to an unlimited number of individuals. This exclusion amount doubles for joint gifts made by a married couple

Early Mortgage Payment

Make your January mortgage payment before December 31^st so you can claim the interest this year.

Happy tax planning and be sure to check with your tax advisor to see which of these tax strategies apply to you!

Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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