The Tax Factor

This article courtesy of Feed the Pig. Copyright 2011 American Institute of Certified Public Accountants.

This time of year everyone seems to have the holidays and shopping at the top of their to-do lists. But what about taxes? While tax season may not officially start until January, there are things to consider at the end of this year.

Take it to the max. The IRS will cut the maximum allowed in a flexible spending account (where you can save pretax dollars specifically for medical expenses) from $5,000 in 2012 to $2,500 in 2013. Make the maximum contribution for next year now—and schedule costly FSA-covered procedures, such as Lasik surgery or orthodontia, for 2012 rather than 2013.

Deduce your deductions. Every year taxpayers miss out on significant tax refunds by forgetting to include deductions. Did you know that you may be able to deduct costs associated with looking for a job, improving your home or driving to the doctor? Plus, there's still time to add to your list of deductions by donating to charity, just make sure you have adequate documentation.


Understand AMT. While 2010 regular income tax rates were extended through 2012, the latest in a long line of alternative minimum tax "fixes" (in the form of increased AMT exemption amounts) is effective only through the end of this year. If AMT is a factor in your year-end planning, make sure you understand how changes may affect you.


Get it before its gone. The credit for energy-efficient improvements made to your home expires at the end of 2011. The credit is limited, however, and you may not be able to claim a credit for 2011 if you've claimed it in past years.

For more year-round tax planning tips and information, visit 360 Degrees of Taxes. The Ask a CPA section has CPA's available to answer your personal tax questions.


Visit www.feedthepig.org for more money-saving tips.