Time is running out for moves you can make to reduce your 2011 tax bill. Some actions to consider right now:
- Be sure to max out your 401(k) plan at work. This year you can sock away $16,500 ($22,000 if you’re 50 or older).
- Establish a pension plan for your small business. You may qualify for a tax credit of up to $500 in each of the plan’s first three years.
- Plan year-end purchases of new or used business equipment to take full advantage of the expensing limit of $500,000 for 2011. Purchases of new equipment (not used) can qualify for first-year 100% bonus depreciation.
- Get your investment records in order so you can make wise year-end sell decisions, either to rebalance your portfolio at the lowest tax cost or to offset gains and losses.
- Track down reinvested dividends for any stock sold in 2011. They’ll add to your cost basis and reduce taxable gain or increase deductible loss on the sale.
If you’d like to discuss tax-cutting options that fit your particular situation, please contact us soon for a year-end planning review.