First, some good news: This year's tax deadlines are unusually late. Because April 15 coincided with a District of Columbia holiday, 2010 tax payments and tax returns are due Monday, April 18. The deadline for those with six-month filing extensions is October 17. We hope you're already finishing up your taxes, though!
As we head toward the deadline, here are some last-minute tax filing tips and reminders:
- For 2010 only, people who are self-employed and have deductible health-insurance payments may deduct the payments against Social Security taxes on their Tax Form 1040 Schedule SE. Also, for years 2010 and after, taxpayers may deduct premiums paid for a child under the age of 27 at the end of the year, even if the child isn't a dependent for tax purposes.
- The bonus deduction for capital expenditures (that went into effect in September 2010) will remain in effect through 2011. Normally, you can write off 100 percent of the cost of certain types of fixed assets purchased in the year by making a Section 179 election and writing off the cost...but you can only write off up to the amount of your taxable income. Under the bonus deduction now in effect, you can write off 100 percent of certain assets, even if it creates a loss. So, if your spouse earns income and you are filing jointly, you can reduce your [joint] tax bill by taking advantage of the bonus depreciation deduction.
- You may deduct contributions to a regular IRA made by April 18, the tax filing and payment deadline. However, contributions to SEP IRAs and other pension plans may be made until October 17 for those with individual income tax return filing extensions( as long as the plan was established before December 31, 2010).
- You may also deduct up to $6,150 per family ($3,050 single) for a Health Savings Account (HSA) if you had a qualifying high-deductible health plan in 2010. Contributions are due by April 18.
- After 2009, anyone can convert a traditional IRA to a Roth IRA. And unless you elect otherwise, 50 percent of the income from the 2010 conversion is included in income in both 2011 and 2012.
- Long-term capital losses (those on investments held longer than a year) can be used to shelter an equal amount of gains. Up to $3,000 of excess can then be deducted against ordinary income per year, and what's left can carry forward indefinitely.
The home office deduction is available to people who utilize a part of their home 100 percent for business. Form 8829 walks you through the calculation, which is usually based on the ratio of square footage of the business space to the total square footage of the home. Contact your CPA or tax preparer to discuss the tax implications of the home office deduction.
You should consult with your CPA or tax preparer to see if any of the above tips can help you.
PPA members with questions can contact Bridget Jackson, (800-339-5451 ext. 277) PPA's SMS Manager