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Last Call for Taking Advantage of Some Tax Credits and Deductions for 2010
Published on Dec 15, 2010
Read 'Last Call for Taking Advantage of Some Tax Credits and Deductions for 2010' at 'Time to Start Up,' the small business blog by BizFilings.
The end of 2010 means it may be your last chance to maximize a number of tax credits and deductions - unless Congress acts to extend these provisions beyond 2010 before it adjourns.
No better time than the present - since it's a risk to bet on Congress when planning for your future. Take advantage of what you can now.
A few of the major provisions set to expire at year's end include:
Say good-bye to the American Opportunity Credit. This credit provides many taxpayers a credit for a broad range of educational costs. In 2011, minus congressional action, the education credit resorts to the far more limited Hope Credit. To take advantage of these fleeting moments with the American Opportunity Credit, step up 2011 educational expenses in 2010. For example, the experts at www.toolkit.com recommend that you pay that second semester tuition bill for your college junior or senior by Dec. 31 because post-2010, only the first two years of post-secondary education tuition is eligible for the credit. Dish out the dough for all those required books and supplies for all your students this year as well. These expenses are applicable to the American Opportunity Credit but not the Hope Credit.
Make energy-conscious home improvements. You can save up to $1,500 on your 2010 income tax bill if you make purchases toward the end of the year to improve your home's energy efficiencies. The non-business energy-property credit is available for certain energy-efficient home improvements, spanning major purchases to more minor items implemented before the end of the year. Keep in mind that the $1,500 limit is a combined 2009 and 2010 limit. This means if you claimed the full amount of credit last year, you will not be able to do so this year.
As always, make sure to check with your accountant to ensure you cover all bases relative to your business.
P.S. Tax and business attorney Barbara Weltman reminds us that today is the due date for the final installment of corporate estimated tax for 2010. Review your income and expenses to date so your corporation doesn't overpay what's owed; it won't receive any interest on the money. It's better to make a mistake on the side of underpaying what's owed since underpayment penalties today are modest because of low-interest rates. Corporate estimated tax rules are explained in IRS Publication 542.