We are quickly approaching the date most Americans dread, Tax Day! If you have waited this long, you have already missed the TurboTax Cutest Tax Deduction contest and most deductions, which have to be done by December 31st of the tax year (2009).
Don’t worry, all is not lost, there are some very real options to lower your tax bill. Before we look at some options to reduce your tax liability for actions taken in 2010, you should check and double check your records to determine what actions that you took prior to January 1, 2010 which may lower your obligation to the United States Federal Government. Luckily, Turbotax guides you through 350 deductions.
Reduce your 2009 Tax Bill with 2010 Actions
Contributing to Your IRA
Contributing to your IRA, today, can reduce last year’s tax liability. Publication 590 from the IRS states it very clearly, if you are otherwise eligible for an IRA then,
Contributions must be made by due date. Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. For most people, this means that contributions for 2009 must be made by April 15, 2010, and contributions for 2010 must be made by April 15, 2011.
By contributing to your IRA by the defined contribution due date you are lowering your taxable income and thus possibly lowering your tax
Enter into a Contract to Buy A Home
Despite the ridiculous push by real estate agents as well as builders I am not advocating buying a house just for a tax credit. However, as the IRS states very clearly in their First Time Home Buyer’s Credit Memo,
The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1. However, the new Worker, Homeownership and Business Assistance Act of 2009 has extended the deadline. Now, taxpayers who have a binding contract to purchase a home before May 1, 2010, are eligible for the credit. Buyers must close on the home before July 1, 2010. [Added Nov. 12, 2009]
While it is very unlikely you can close prior to April 15, you may be able to enter into a contract for that home. Again, this isn’t a reason for making that offer, but it may be a reason you make the offer tomorrow rather than in 4 weeks.
Contribute to your Health
Depending if you are otherwise eligible or have a Health Savings Account or Medical Savings Account you can contribute to that account to
reduce your taxable income. Specifically, in Publication
969 the IRS, lets you know that,
You can make contributions to your HSA for 2009 until April 15, 2010. If you fail to be an eligible individual during 2009, you can still make contributions, up until April 15, 2010, for the months you were an eligible
Your employer can make contributions to your HSA between January 1, 2010, and April 15, 2010, that are allocated to 2009. Your employer must notify you and the trustee of your HSA that the contribution is for 2009. The contribution will be reported on your 2010 Form W-2.
You can make contributions to your Archer MSA for 2009 until April 15, 2010.
These are just three examples of how to reduce your taxable income, while benefiting your future.