Tax Savings Moves You Should Make Before 2012

"The year is almost over, but there is still time to make some moves that will save you money on your 2011 taxes. With tax credits and deductions for everything from education costs to home renovations (some set to expire at the end of the year), knowing how and where to move your money could save you thousands of dollars. Taxops.com recommends the following tax-saving moves:

(1)  Find out if your employer will defer a bonus you may receive this year until 2012; if so, this will give you another year before you’ll have to pay taxes on it.

(2) Consider using a low-interest credit card to prepay expenses that can generate deductions for this year, then pay off charges as soon as possible, perhaps with any tax refund you get.

(3) Increase the amount you set aside for next year in your employer’s health flexible spending account if you did not set aside enough for this year. And remember that you can no longer get tax-free reimbursements for over-the-counter drugs without a doctor’s prescription.

(4) If, by December 31, you become eligible to make health savings account (HSA) contributions, you can make an entire year’s worth of deductible HSA contributions for 2011.

(5) Realize losses on stock while substantially preserving your investment position. This can be done in several ways, one of which is to sell the original holding and then buy back the same securities at least 31 days later.

(6) Make gifts sheltered by the annual gift-tax exclusion before the end of the year, thereby saving gift and estate taxes. You can give a maximum of $13,000 each  in 2011 to an unlimited number of individuals. The transfers also may save family income taxes when income-earning property is given to family members in lower-income tax brackets.

(7) If you live in a state where sales tax deduction is an option, accelerate big-ticket purchases in 2011. Unless Congress acts, this election won’t be available after 2011.

(8) Settle an insurance or damage claim to maximize your casualty loss deduction this year.

(9) If you are a homeowner, make energy-saving improvements to the residence, such as putting in extra insulation or installing energy-saving windows or an energy-efficient heater or air conditioner. You may qualify for a tax credit if the assets are installed in your home before 2012.

(10) Unless Congress extends it, the up-to-$4,000 deduction for qualified higher education expenses will not be available after 2011. Therefore, consider prepaying eligible expenses if doing so will increase your deduction."