To help taxpayers prepare for anything, including possible smaller paychecks, H&R Block recommends maximizing retirement plan contributions. Marion Clarke with the Houston office says action now can potentially decrease your 2010 tax bill.
“Check your 401(k) statement and if you haven’t put in the maximum for the year, make sure you go ahead and do that. Also, max out your IRA contributions. You can actually do that through April next year, but you need to be getting your ducks in a row. There’s a special deal this year where they’ve taken away the income limits on converting to Roth IRAs and it even allows you to defer the income to 2011 and 2012 and not pay the taxes on that until those years.”
There’s a Hybrid Vehicle Credit that can be as high as $2,000. Home energy-efficiency improvements are eligible for tax credit of 30 percent of the cost. There are other tax issues to consider.
“Some of the best things you can do—apart from the retirement plan stuff—pay your property taxes this year and then you’re going to ensure you’re getting the deduction. If you’re a small business owner, then pull in anything that you plan to buy before the end of the year so you can take a deduction for them on your 2010 tax return. And also, if you have children in college, and you haven’t taken full advantage of the American Opportunity Credit, you might want to consider paying spring tuition before the end of the year, especially if your income’s going to go up and yo might get phased out of that.”
H&R Block is offering W-2 Early Access service to get access to W-2s before the February 1st distribution deadline. Some 185,000 companies participate.