With the uncertainty looming over tax reform starting in 2012, year-end tax planning will be especially challenging. If Congress does not make any changes, various income tax benefits will expire at the end of 2011.
Some examples are:
Individuals
· Option to use state and local sales tax deductions
· Tuition and related fees deductions
· Tax-free transfer of IRA to charity
· Higher alternative minimum tax exemptions revert back to low thresholds
Businesses & Business Owners
· 100% Bonus depreciation
· Higher limits on Section 179 deduction
· Work opportunity tax credit
· Research credit
Some possible year-end tax planning strategies are:
Individuals
· Increase the amount of flexible spending withheld from your salary if you set aside too little this
year.
· Accelerate big ticket purchases in 2011 in order to assure a deduction if you know you will elect to
claim a state and local sales tax deduction instead of a state and local income tax deduction in
2011.
· Take advantage of energy saving home improvement deductions if you are a homeowner.
· Purchase qualified small business stock before the end of 2011. No gain is recognized if such
stock is purchased after September 27, 2010 and before January 1, 2012 and is held for more
than five years.
Businesses & Business Owners
· Make expenditures that qualify for the business expensing option. If Congress does not change
the rules, the dollar limit could be dropped to $139,000 with an investment ceiling limit of
$560,000 and expensing will not be available for qualified real property. Currently, the expensing
limit is $500,000 with an investment ceiling limit of $2 million.
· Make expenditures that qualify for 100% bonus depreciation.
· If you are self-employed, set up and contribute to a self-employed retirement plan.
For questions or more tax planning strategies that may apply to your situation, please do not hesitate to contact our professionals.