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There's another list you should be checking this season beyond your holiday shopping list. Okay, so it's not as fun, but this list is about saving money, rather than spending it, so let that fact amp you up a bit to attack your year-end tax to-do's!
Give to Charity
Open your heart and wallet—and since it's the holidays, and both are probably open already, this shouldn't be too hard. Giving to charity is a marvelous thing to do at any time, but especially before the end of the year, when charities are most in need and you're looking to ease your tax bill for 2010. Pull together receipts from throughout the year for donated clothing and other gently used items, and tear through the family closets and drawers and donate more. Keep all records of cash donations, especially if your total is $250 or more (you cannot deduct political or individual contributions). Another cool fact: If you made a donation on a credit card in 2009 (say, in December) but didn't pay the card off until January or later in 2010, this deduction belongs in this year's tax return.
Factor in the Job Hunt
Did you job hunt this year? If so, you can deduct travel expenses, resume prep and continuing education expenses. If you had to move for a new job, there are a load of expenses that you may be able to deduct, lessening the big cost of a move.
Don't Forget the Doctor
How about the doc? If she saw you and your family a lot this year and you're close to the 7.5 percent (of adjusted gross income) in medical deductions needed to declare them as a tax deduction, schedule a procedure or appointment that you need anyway before the end of the year. And speaking of the doctor, don't forget to use up all of your flexible spending account funds, pronto! If you don't empty your FSA, you lose your own money (though most plans allow you another 2 1/2 months after year end to use what you've got). And if you find yourself with a bloated FSA right now, be sure to adjust your paycheck withdrawals for next year.
Apply IRA Contributions
If you have an IRA separate from or in addition to a 401(k)/403(b), you have until April 15 of the coming year to plump up your retirement savings and apply your contributions to 2010 taxes as a deduction (if you qualify under income limits). Remember, Roth IRA contributions are not deductable, but traditional IRAs are, as are SEPs (simplified employee pensions) for the self-employed and/or business owners—again, subject to income limits.
If You're Going to Gift Money, Do It Now
Got some extra dinero to gift? If you're looking to hand over some cash to a loved one and you haven't hit the limit of $13,000 for 2010 (or $26,000 if you're giving as a married-filing-jointly couple), then give away and give away now, before January 1. As long as you're below that limit, you will not have to file gift taxes—and that's something to feel merry about!
Got a question for Carmen? E-mail her at firstname.lastname@example.org