Taxpayers who qualify for the first-time homebuyer credit or the long-time resident homebuyer credit and buy a home in 2010, don't have to wait to claim the credit when filing their 2010 returns. They can instead amend their 2009 tax returns to claim the credit and receive it sooner.
Self-employment Strategies — If you're self-employed and use the cash method of accounting, you can decrease your taxable income by delaying your December customer billings until January. You can also buy supplies and equipment at the end of one year instead of the coming year.
Charitable Donations — Donating to charities before the first of the year counts as a deduction on your return. You can include cash contributions that you charged to a credit card in 2009 even if you don't pay the bill until 2010. You can also include checks mailed by Dec. 31, 2009. Be sure to get a receipt from the charitable organization.
Retirement Contributions — One way to lower your taxable income for the year is to contribute to or open a retirement plan, such as a 401(k), 403(b), deductible IRA, SIMPLE IRA or SEP. You could have made contributions for your 401(k)s and 403(b)s up until Dec. 31, 2009. But you have until April 15, 2010, to make a contribution to an IRA.
Bunching Deductions -- When deciding whether or not to itemize deductions, your year-end strategy should focus on bunching or claiming itemized deductions in alternate tax years.
Business Travel -- The expense of your daily commute to work isn't tax deductible. However, if you find that you must travel to secondary or temporary locations — even within your metropolitan area — as part of your job and your employer does not reimburse you for that travel, those expenses may be tax deductible.
Home Office Deduction -- If you use a portion of your home regularly and exclusively for business, you may be able to deduct expenses for that portion of the home, including interest, taxes, rent, insurance and utilities. You can deduct business expenses for the use of your home only if the use is for your employer's convenience.
Year-End Equipment Purchases -- Did you know that in many cases you can fully expense year-end equipment acquisitions? Certain limitations may apply, so review the rules carefully.
New vehicle purchase -- Buying a new car is a great tax planning strategy. There are deductions related to the sales taxes on the purchase, "bonus" depreciation deductions that take the edge off of other limitations and sometimes the expensing election (where you can deduct much of the expense) may apply. Certain limitations may apply, so review the rules carefully.
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