Save Thousands of Dollars - 4 Simple Tax Strategies for 2010

Tax Planning is always important to do but even more important now. It generally made sense to defer taxes to future years, but that may not be the case as it appears future taxes could be going up.

2010 Is a Big Sunset Year On-Tax Provisions
Several tax benefits will be going away. For instance, the top tax bracket will be going up from 35% to 39.6%, some talk of it going up to 45%. The minimum tax bracket will go from 10% to 15%. All of us will want to stay abreast of tax legislation. Because of the coming sunset on provisions,

2011 Tax Year
2011 appears as though it will be one of the biggest tax acts of all time, so now is the time to start planning for taxes.


Here are 4 Tax Tips That Can Save You Thousands of Dollars.

1)  IRA Conversion to Roth IRA might be a great idea if you think that taxes will be going up. Remember, Roth IRAs allow you to never pay taxes on your gains again! 2010 will be a great time to do such a conversion because there are no income limitations, and you can defer the tax on the conversion over a 2 years period, 2011 and 2012. However, beware of the higher tax brackets in those years. These can carry complexities from a tax perspective so they need to be well thought out and planned with a tax professional.

2)  The New Home Buyer Credits has been extended until June 30, 2010. This is a tax credit of up to $8,000 for first-time home buyers. In order to qualify you must not have owned a home for 3 years. It must be your primary residence, and you must also live in the house for 3 years. There are phase out zones on high income tax payers. A binding Contract must be signed by April 30, 2010 and close by June 30, 2010.

3)  There is also a $6,500 tax credit for existing homeowners who buy a new home. You must have owned and lived in a home for 5 of past 8 years. If it is your principle residence, you must hold property for 3 years. There are some limitations on income and amount of property. You could use this credit even if you downsize your property. Binding contract must be signed by April 30, 2010 and close by June 30, 2010.

4)  There is a 30% tax credit for energy saving measures up to $1,500. Qualifying items are energy star windows, energy saving appliances, such as, high efficiency home heating and air conditioning systems, water heater and biomass stoves. Not only can these items save you money on your taxes but also on your utility bills. Now maybe great times to buy these items as things are on sale do to the economy.

Remember, the IRS only requires us to pay as much in taxes as is written into the law. If you don’t know the laws, you can wind up paying a lot more than you need to. It’s not the IRS’s job to educate us. However, there are strategies and little-known IRS codes that when used properly can you thousands of dollars. That is why it is important for you to do your research or talk to a tax professional.