As tax time approaches taxpayers may be wondering if there are any options they can use to lower their income taxes. In order for any deduction to count for the tax year, it must have been made by December 31. Here are 6 tips to reduce your 2011 taxes.Contribute to a Qualified Charity
To claim the deduction, you must make the donation to a registered non-profit organization and you'll need to get proof of your contribution from a cancelled check, a credit card transaction, or a receipt from the organization itself. Remember to qualify as a deductible contribution the donation should have been made prior to December 31.
Make Home Improvements That Improve Energy Efficiency
The IRS allows taxpayers to claim deductions for certain energy efficient home improvements such as installing a tankless water heater, solar lighting panels, or upgrading to energy efficient windows. Depending on the type of home improvement done, you may qualify to deduct up to 30 percent of the installation and purchase price as a deduction.
Adjust Your Investment Portfolio
You can deduct up to $3,000 per year in capital losses and you can carryover the excess losses to future years. If your portfolio is showing lots of taxable gains as of the beginning of December, you might consider selling some of your stock shares to reduce the impact of those gains as much as possible.
Top up Your Retirement Accounts
Making the maximum allowable contribution to your retirement plans is a great way to take a tax deduction. The IRS allows taxpayers to contribute up to $5,000 to IRA plans and senior taxpayers can contribute up to $6,000. These contributions can go a long way to help with tax liability.
Use Your IRA to Make a Charitable Donation
If you're over the age of 70 1/2, you can claim an additional charitable donation deduction by having a donation sent directly from your IRA plan. Instead of claiming this donation as an itemized deduction, you'll be able to exclude the amount you donated from your gross income for the year.
Claim the Small Business Health Care Tax Credit
Small business owners who pay for at least half of their employees' health care premiums may qualify to claim up to 35 percent of these costs as a tax credit on their business income.
As tax time approaches, many taxpayers may be worried about their impending bill from the IRS. By using these tips to reduce 2011 taxes and consulting with a qualified tax resolution specialist you can substantially reduce your tax liability.
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