As the deadline for filing taxes quickly approaches, certified financial planner Bruce Hagan offers some suggestions to help you save on your tax bills.
First, he says you want to make sure you're taking advantage of any and all tax breaks the code allows, so if you have anything other than a very simple tax return you may want to seek the help of a CPA or tax preparer. They may tell you that at this late date they're too busy and will need to file an extension for you, but that may still be prudent if you're not pretty good at this thing.
"They may find a deduction you weren't aware of," he said, "and the satisfaction of knowing it's completed properly may be worth the fee you pay them."
Hagan also has thoughts on retirement plans. He says you have until April 15th to establish and fund traditional and some other IRA accounts for the 2009 tax year.
"You may want to consider a Roth IRA which doesn't provide an immediate tax deduction but offers some real advantages when money is later withdrawn in retirement. While it won't affect your '09 taxes you may want to consider a conversion to a Roth IRA this year, there's a lot of information online about that," he said.
If you're eligible for a company retirement plan, Hagan suggests you consider participating. There may be a contribution match of some sort and it's a great way to save.
In closing, remember that 2009 is over and most tax saving measures that you employ now will really benefit your 2010 tax bill.
"Many people sold investments at a loss the last couple of years and may have tax loss carryovers that can be used to offset future capital gains."
The stock market has rallied sharply over the last 12 months and if you've participated in that rally and have unrealized gains in stocks, Hagan says you might consider selling some and using those past losses to offset the gain.
"Also, there's the possibility of tax rates going up in 2011 so some people are trying to accelerate any income payments due them into this year rather than waiting until next year to take the money."