Getting Ready For 2011

Worrying about the uncertainties of the 2011 tax year isn’t going to do too much of anything. Chances are we are not going to hear anything definitive until later into this month. That does not mean that sitting around watching your favorite news medium in anticipation is the way to go. There are things you can do right now to get yourself ready anyways.

These are complements of the authoritative Farnoosh Torabi at CBS:

The first is to take away all your business expenses. Get familiarized with income tax for businesses and know the route you need to take. That means you need to be keeping all you business-related receipts. Kinkos, any travel, food, lodging, or office supplies can be itemized later. Be careful in doing so, make sure you don’t get carried away and start claiming iTunes downloads and tickets to the big game. The last thing anyone needs right now is dealing with being audited. Check out the IRS’ list of qualifying deductions.

Second, you need to go back over all your medical expenses. Out-of-pocket medical expenses are allowed as deductions as long as they add up to 7.5% or more of your AGI. Eye surgery and other “elective surgeries” that end up being paid for out-of-pocket, are could help reduce your taxable income.

Charitable donations are next. They can be up to 50% of you AGI including giving away cash sums and cars. Real Estate, art, and antiques are deductable up to 30%, be it that they are considered appreciated property donations. Even clothes taken to Goodwill add up. So remember that before your next garage sale. Capital Gains can help too. Net losses before the end of the year offset short-term capital gains. These entries would otherwise get taxed up to 35%.