Year-End Tax Smarts

By Dian Vujovich

Next year is only seven weeks away. OMG. That means it’s time to think tax strategies and take advantage of whatever ones you can.

To get you headed in that direction, here’s a brief overview of some covered in a recent WSJ.com story:

• Home-buyer tax credits. As I’ve written before, now is a terrific time to buy a home. With real estate prices and mortgage rates really low—and more attractive than they have been in years—- there are plenty of deals out there that are too good to pass up. So don’t.

Top those low home prices and mortgage rates off with the government’s first-time home- buyer tax credit program and there’s no reason not to start looking for new digs. Plus, the program extends to July 2010 and if you already own the home you’re in and have for at least 5 years, you may still qualify for the deal. Check it out, along with the tax credit, each year you’ll have interest deductions to take advantage of at tax time. Unless of course, you pay cash for the place.

• Buy a new car. Purchase a new car before Jan.1 and you may be able to deduct sales, excise taxes and other fees if your gross income meets certain criteria.

BTW, according to TrueCar.com, the best day to buy a car will be on Black Friday. One reason, it’s the end of the month and that’s always a plus for buyers seeking deals.

• Plump up your 401(k). This year’s 401(k) contribution can be as much as $16,500 if you’re under age 50 and $22,000 if you’re over. If you’re a believer in 401(k)s, consider socking away as much as you can.

• Investments. Losses are lovely at tax time. You can deduct up to $3000 each year and if those losses exceed that amount they can be carried forward.

• Medical expenses. Often tricky to take advantage of because those expenses have to amount to more that 7.5 percent of your adjusted gross income, deductions include things like insurance premiums Medicare Part B and D premiums, co-payments for drugs, and medical travel expenses and more.
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If any of these tax shoes fit, you might want to act now. For more details, read the entire WSJ story at http://tinyurl.com/y87mll4 and visit http://www.irs.gov for the particulars.