How to Save : As the year comes to an end. You may want to start giving some serious thought as to how you can save on taxes. There are many tax savings strategies you can utilize to help you save hundreds. If not thousands, of dollars that you pay in income tax per year.
One way is to accelerate your individual income, particularly if you belong in the 35% maximum tax bracket. Congress under the Obama administration will be letting the tax cuts under the Bush administration lapse right after 2010. This means maximum tax rates are set to rise up to 39.6 percent.
Congress has likewise extended first time home buyers’ credit worth $8,000 right up to March 2010, which means that you can wait until this time to buy your first home.
Buy that vehicle you’ve been considering before 2009 draws to a close. This can help you take full advantage of tax savings on the sales tax deduction, particularly if your new vehicle costs you upwards of $49,500. You can actually include the new vehicle’s sales tax under standard deduction.
Another option for tax savings is converting to a Roth IRA, but not until 2010. You can actually have your conversion income for this year deferred and stretched over 2011 and 2012, unless you are in the maximum tax bracket and prefer not to take this option.
If you are looking for huge tax write-offs. You might want to consider putting your business assets to good use on or before the end of the year. You can actually claim a bonus depreciation for 2009 which will allow you to write-off as much as 50% of the cost of your assets. The other half you can have deducted through regular depreciation. Take note, however, that this applies only to new assets that have a life of up to 20 years.