Tax Savings Strategies to use before Year End
October 8, 2010
We are closing in on that time of year when cool weather moves in and we know the holidays are around the corner. It is also the time to get serious about utilizing some tax laws to your advantage as we head into the home stretch of 2010. Here are a few key ideas to think about:
1. Consider a Roth Conversion if you have money in an IRA account and you are willing to pay the tax now on the conversion amount. Take advantage of this especially if you are a high income individual because there is no income limit during 2010. Pay tax now on the conversion amount and get tax free distributions during retirement.
2. Hire your children to do work in your small business. The work must be legitimate, in other words you must document hours and pay, but you can pay your child $5,700 in wages tax free to them and tax deductible to you. If you are a sole proprietor you don’t even have to pay employer taxes on those wages. Your child can then make contributions to a Roth IRA. You must report wages paid to the IRS on appropriate tax forms such as W-2 and Form 941.
3. Pay for qualified tuition and and related college expenses during the first four years of post secondary education for yourself or a dependant and get up to $2,500 in an American Opportunity Credit.
4. Put in a new energy efficient furnace, air conditioner, windows or insulation in your home during 2010 and you can get energy credit of up to $1,500 or 30% of the cost of these improvements. You must act quickly because after 2010 this credit goes away.
5. Consider a setting up a Health Savings Account for you or your employees. Contributions to an HSA are tax deductible and distributions are tax free if you pay for qualified medical expenses. Employer contributions to an HSA are not subject to FICA/Medicare tax and are one way to get tax free benefits to your employees. To be eligible to set up an HSA you must be enrolled in a high-deductible health insurance plan.
6. Establish a health insurance plan for your employees. If you are an employer with less than 10 employees and you pay for at least half of the health insurance premiums for your employees you may take advantage of up to a 35% tax credit on the amount of premiums paid. To qualify for the maximum credit the average annual wages paid to employees must be $25,000 or less.
7. Forecast your income for 2011 and consider showing more taxable income (more revenue and less deductions) during 2010 because tax rates are scheduled to go up in 2011.
If any of these tax savings tips are interesting to you or if you have questions, please call me for more information. Be smart about your financial decisions and put some extra money in your pocket.
October 13, 2010 at 12:36pm | Permalink
Although we use investor and trader as we please, in the world of taxes these to words have different meanings and your taxes will be affected according to the meaning you put.
January 11, 2011 at 11:13pm | Permalink
These are great suggestions. I especially like the idea of hiring your children if you are able to. I never realized there was such a tax credit for that. Perhaps I should get my daughter working for me!
February 24, 2011 at 1:23am | Permalink
This is a great idea. I really like this. Thanks a lot.
March 8, 2011 at 12:38am | Permalink
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April 5, 2011 at 4:34am | Permalink
well nice article
May 31, 2011 at 9:27am | Permalink
Thanks for the information. Do you have any more available for the current tax laws?
June 19, 2011 at 7:59pm | Permalink
Nice post.Its so interesting.So i want some information for sharing this side with some of my friend. Thanks. Criminal Lawyer Toronto
July 14, 2011 at 7:51am | Permalink
I`m agree with you! This is the first we should do
July 29, 2011 at 7:33am | Permalink
I like Ron Pauls Idea’s for tax saving. 0%
July 29, 2011 at 7:34am | Permalink
This applies to our business well. Thanks
July 29, 2011 at 7:35am | Permalink
Would this apply to Canada as well?
July 29, 2011 at 7:35am | Permalink
I don’t this does apply to Canada but US only.
July 29, 2011 at 7:36am | Permalink
It’s to bad this does not apply to Canada.
July 29, 2011 at 7:37am | Permalink
I like this tip the best.
. Forecast your income for 2011 and consider showing 7more taxable income (more revenue and less deductions) during 2010 because tax rates are scheduled to go up in 2011.
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Useful strategies for savings tax before end year. I think if anyone obeyed these rules though she/he must be able to save some money from giving tax. Thanks dude
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The second tip is much valuable for me my sun is of 21 and he likes to help me so that two purpose is solve one is tax saving and another is my growth.
September 9, 2011 at 2:40pm | Permalink
You pointed out some great ideas here. I especially liked the advice given for improving the energy efficiency of home. I think it is very appropriate for this time.
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