Why do people give so many charitable gifts in December? The holiday spirit may not be the only thing inspiring people to give to the less fortunate this month, it may also have something to do with lowering your 2009 tax bill. If it’s taxes you’re worried about, there are a few other moves you can make after you’ve done your charitable giving. Ashlea Ebeling of Forbes has a whole list of things you can do to lower your 2009 tax bill before year’s end, we’ll mention just a few of them here:
- Fund those retirement savings accounts. As the article above points out, you can fund your 2009 retirement accounts up until April of 2010, but if you have an employer who will match your investment it’s likely they’d like to know before the end of the year what amount they’ll be matching. If you’re self employed you’re on a tighter schedule because the deadline for setting up a solo 401(k) is December 31.
- If have plans to receive any expensive medical procedures in the near future that won’t be covered by your insurance, you may want to consider having them done before January 1st. Unreimbursed medical expenses that exceed 7.5% of your adjusted gross income are deductable.
- If you’re in the market for a new home, the homebuyer credit has been expanded from November 30th to May 1st 2010. This credit used to be only for newcomers to the real estate market, but is now available for both new homebuyers and longtime homeowners looking to purchase a new home.
- A different—but related—course of action is making upgrades to the home you already own. Certain energy efficient improvements to your home can also get you a credit on your taxes… if you get the improvements done before the end of the year.
- One more way you may save money on your taxes this year that you won’t find mentioned in the Forbes article is to create an estate plan which includes a trust. To the extent that the legal planning services cover tax advice or regard income producing property, the fees you accrue in establishing and operating a trust are deductible from your federal income taxes.
All of these are good ways to save money on your 2009 taxes, but action needs to be taken before the end of the year. That gives you only… 24 days left to take action!