BOSTON (TheStreet) -- Even though only a few days are left before the start of the new year, there are nevertheless still tax moves that can be made to shave money off this year's bill and set a strategy for the coming year.
Tax planning for the coming year was made more difficult by uncertainty over whether the so-called Bush tax cuts would be extended. Without Congressional action, tax rates were on track to hit up to 39.6% on ordinary income and 20% on capital gains.
There are last-minute tax moves that can shave money off this year's tax bill and set a strategy for the next.
Now that a tax bill compromise has been brokered and signed, albeit in late December, knowing what the landscape will be allows for some late-in-the-game adjustments.
A few suggestions from the tax experts at
Bunch itemized deductions.
Many expenses can be deducted only if they exceed a certain percentage of your adjusted gross income. Consolidating itemized deductible expenses into one year can help you get over these limits. To get over the 2% AGI floor for miscellaneous expenses, bunch professional fees such as legal advice and tax planning and unreimbursed business expenses such as travel and vehicle costs. It may make sense for some to defer claiming these items until next year, if doing so allows for a greater deduction.
Giving appreciated property to charity
allows you to deduct the full value without paying capital gains taxes. Its advisable not to donate depreciated property. Sell it first and give the proceeds to charity, so you can take the capital loss and a charitable deduction.
It's not too late to maximize contributions to a retirement account.
Contributions reduce taxable income at the time you make them, and you don't pay taxes until you take the money out at retirement. The contribution limits this year are $16,500 for a 401(k) and $5,000 for an IRA (not including catch-up contributions for those 50 and older). Contributions can be made as late as April 15.
Roll over into a Roth account.
You don't get a tax break when you put money into a Roth, but the money grows tax-free. Even though the extension of tax cuts keeps the status quo, paying taxes on a rollover now could save in the long run when rates do rise again. The $100,000 AGI limit on these rollovers was lifted this year, allowing high-income taxpayers their first opportunity to convert their retirement accounts. You have the option of paying half of the tax associated with the rollover next year and the other half in 2012 unless you make an election to pay the tax in 2010.
Consider establishing a gifting program for your children and grandchildren
to take advantage of the estate tax annual gift tax exclusion. Gifts of up to $13,000 per recipient ($26,000 for married couples) are generally excluded from gift taxes this year and will be removed from your estate (reducing the tax hit there). Payments of tuition to an educational institution for the benefit of your children or grandchildren are excluded from the gift tax.
-- Written by Joe Mont in Boston.
>To contact the writer of this article, click here:
>To follow the writer on Twitter, go to
>To submit a news tip, email:
Follow TheStreet.com on
and become a fan on