Do you have stock losses?
Sell off investments with gains and offset the losses.
Strategy: Sell off profitable investments and immediately repurchase them. You’ll now have a capital gain for tax purposes to offset your losses, and you’ll have a new cost basis in the investment.
Isn't this tactic prohibited by the wash sale rule? No, the wash sale rule only applies when you sell an investment at a loss and repurchase the same investment within thirty days. If you're selling an investment at a profit, the wash sale rule won't apply.
Don’t jump.
President Obama has proposed increasing the tax rate on long-term capital gains to 20%. It might be prudent to keep carrying over some capital losses to offset future capital gains.
Teachers: Teachers – Don’t Forget Your $250 Tax Deduction.
There is a line item deduction on the front of your tax form for $250 for these costs. You use your own money for classroom supplies and/or food for your students, so take advantage of this token gift and buy some extra supplies if you haven’t met this $250 allowance.
Prepay college expenses: The rule is that if a class begins within the first three months of next year, you can take a deduction or tax credit if those expenses are paid this year. So, pay the tuition and other college expenses before December 31.
NY State 529 College Plan: This is truly a gift from NY State. If you need to pay tuition, books, room, computer, etc, in January, make a contribution to this plan (max: $5,000 singles/$10,000 married couples). You will receive a deduction for your contribution on the 2009 tax return, and as soon as the check clears, you can withdraw your money! Yes, this is an ‘easy’ button.
Can’t itemize? Think again. Bunch your expenses this year, and fall back to the standard deduction next year. For example, prepay your mortgage and real estate taxes, double-up on charitable contributions, and stock up on your medical deductible expenses in 2009 so you can itemize these expenses on Schedule A and lower your tax burden; then, use the Standard Deduction in 2010, and back to bunching in 2011.
Special Sales Tax Deduction for car purchases
The purchase of a new vehicle priced up to $49,500 made before January 1, 2010, will qualify you for a special deduction of the sales and excise taxes, whether you itemize or not! Yes, restrictions do apply, so check it out on www.IRS.gov.
Residential Energy Credits:
This credit, which expired after 2007, has been reinstated. You may be able to claim a non-business energy property credit of 30% of the cost of certain energy-efficient property or improvements you placed in service in 2009. This property can include high-efficiency heat pumps, air conditioners, and water heaters. It also may include energy-efficient windows, doors, insulation materials, and certain roofs. The credit has been expanded to include certain asphalt roofs and stoves that burn biomass fuel. Limitation: The total amount of credit you can claim in 2009 and 2010 is limited to $1,500.
Tax accountant Joseph Reisman’s practice is at 2751 Coney Island Avenue, phone 718-332-1040
