8 Tax Strategies to Consider Before 2010
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Photo: Mike Fillion
With only two weeks left in 2009, you might think that it’s time to throw
in the towel on your 2009 taxes. Not so fast! This is the prime time of year
to implement some smart tax deduction strategies. With minimal effort, you
can still have a huge impact on your 2009 tax return by decreasing your
realized income. If any of these strategies appeal to you, speak with a tax
adviser, pronto.
Strategy #1: Fund your Retirement:
You may still be able to add more contributions for your 401k in 2009.
Additionally, you will be able to make tax deductible contributions to a
traditional IRA up until the 2009 tax filing deadline (April 15, 2010) for
the 2009 tax year. The IRS maximum allowed 401k limit is $16,500 in both
2009 and 2010. For those 50 and over, the catch-up contribution brings you
up to $22,000 both years. For IRA’s, the limit is set at $5,000, while the
catch-up is $1,000 for both years. Check with your employer ASAP to see if
it’s not too late to kick up your contributions.
Strategy #2: Hold Off on the Roth IRA Conversion:
Owners of traditional IRAs can convert all or a part of their accounts to a
Roth IRA if their 2009 modified adjusted gross income is under $100,000. Any
amount converted is taxable income, but is thereafter eligible for the
potential tax-free distribution rules of Roth IRA’s. The big news is that
starting in 2010, the $100,000 income threshold is removed – anyone can do a
conversion. For 2010 only, you also have the option to spread the income
from conversion over the following two years (2011 and 2012). Many have been
waiting for this opportunity.
Strategy #3: Sell Losing Investments (and Big Winners):
The ...
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Categories: Uncategorized Tags: 401k, Adjusted Gross Income, Minimal Effort, Modified Adjusted Gross Income, Roth Ira Conversion, Tax Deduction, Tax Filing Deadline, Tax Irs, Taxable Income, Traditional Ira, Traditional Iras