There are just a few days left in the year, but you can still make a number of simple moves to trim your tax bill — or boost your refund.
The first step is to estimate what you can expect when you file your return, says Bob Jazwinski, president of JFS Wealth Advisors in Hermitage, Pa. An easy way to do that is to take a quick run through an online tax-preparation program. You can use pay stubs and bank or brokerage account statements to get a rough idea of your status.
Once you have an idea if you can anticipate a refund or will owe taxes, you’ll be in a better position to know what actions to take this week.
With a better idea of your status, you’ll know which of these steps might help the most:
■ Take advantage of energy credits. The amount homeowners can claim for energy-saving home improvements will drop next year, so if you can get a storm door or energy-efficient window installed before Friday, the scramble will be worth the effort. The credit equals 30 percent of what a homeowner spends on the improvements, up to $1,500.
■ Fund your health savings account. Do you have a health insurance policy with a high deductible and qualify for a health savings account? Then you can contribute up to $3,050 for an individual policy and up to $6,150 for a family policy for 2010 and claim that amount on your return. If you haven’t fully funded your account yet, doing so now will increase your deduction — which you can claim even if you don’t itemize on your return.
When you use the account to pay medical costs, the money isn’t taxed. And unlike money that is deposited into flexible spending accounts, money in HSAs does not need to be spent in the same year.
■ Make January payments before December ends. Sending the January mortgage payment in this week will allow you to claim any interest included in that payment on this year’s tax return. Likewise, if you must write a check to cover local property taxes next month, doing so now can shift that item to your 2010 return.
For advance payments, Jazwinski says, it’s generally good enough to have the check in the mail by Dec. 31. For gifts, however, the check must be cashed before the year is out.
■ Donate to charity. Both noncash contributions like clothing or furniture and cash donations that are made by Friday are deductible on a 2010 return. Paul Rudoy, managing partner of Horovitz, Rudoy and Rotemen CPAs in Pittsburgh, notes that rules tightened up a few years ago and more proof is now needed to claim deductions. In addition, you’ll need proof of the value of any noncash items donated.
■ Fund your retirement. The deadline for funding your individual retirement account is April 15, but the earlier you get the money in, the faster it will begin working for you.
Eileen AJ Connelly writes for the Associated Press.