Here are 5 MORE ways to cut your 2011 personal income taxes like a tax pro:
- Homeowners – accelerate your tax deductible expenses. Pay your January 2012 mortgage payment and property taxes before December 31, 2011. You can write off the interest and taxes in 2011.
- Take advantage of the 0% tax rate on long-term capital gains and dividends. If you can keep yourself below the 25% income tax bracket, the profits on assets owned for more than a year and dividends are tax free.
- Use tax credits to mitigate state income tax liabilities. There are various tax credits that can be used to avoid some or all state income tax. Some can be generated by a business, some can be purchased, and some are based on taking an action that is supported by the government.
- Pay your state income taxes early. Estimate your state income tax liability to the best of your ability and pay it on or before December 31, 2011. You can write off the amount against your federal income tax liability in 2011.
- Use your annual gifting exclusion. Currently, you can give up to $13,000 per year to a single donee, without incurring any gift tax or eating into your lifetime exemption. If you are a married couple, you can elect gift-splitting, so the $13,000 amount is effectively doubled to $26,000 per year to a single donee. If you will have a taxable estate and/or a significant number of potential heirs, this is a must-do strategy.
Dan Lucas, CPA/ABV, Five Star Professional©
Managing Partner, Credo Financial Services
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