| Right now you probably have taxes on your mind. First, | | | | really messed this area up and you can expect that |
| you need to wrap up last year and file your taxes | | | | money hungry legislators will want to reclaim more of |
| online with a company like TurboTax and their | | | | your money they don't deserve. A qualified estate tax |
| TurboTax Federal Free Edition. After you get that out | | | | professional can help you arrange your affairs to |
| of the way you want to start tax planning strategies | | | | make sure you and your heirs do not get bitten any |
| for 2010 to lower your taxes this year. | | | | more badly than necessary. |
| Here are 10 steps to lower your taxes in 2010. | | | | 7.) Required minimum distributions are back on |
| 1.) Buy a home. You can take advantage of a | | | | retirement accounts. Tax-deferred savings plans such |
| devastated real estate market and buy a home at | | | | as traditional IRAs or workplace 401(k)s are great |
| prices not seen for years. First time buyers - individuals | | | | ways to save for retirement. |
| who haven't owned a residence in the last three years | | | | But Uncle Sam will not wait for its cut of these |
| - can claim up to $8,000. Current homeowners who've | | | | accounts forever. Once you turn 70-1/2, tax law |
| lived in their residence for five of the eight years | | | | demands you start taking money out of these |
| before buying can get up to $6,500. | | | | accounts via required minimum distributions, or RMDs. |
| Do not delay, though, you must have a contract in | | | | They were absent from the law in 2009, but back in |
| place by April 30, 2010, and the deal closed by June 30 | | | | 2010. |
| to qualify for this outstanding credit. | | | | 8.) Take capital gains at lower rates now. George W. |
| 2.) Don't get caught by the Making Work Pay trap. This | | | | Bush's tax cuts included reductions in capital gains tax |
| tax break was designed to put more money in | | | | rates based on taxpayer adjusted gross income. Right |
| consumer hands quicker, but if you work two jobs it | | | | now the highest rate is 15 percent for individuals in the |
| may come back to bite. If you work more than one | | | | 25 percent to 35 percent tax brackets. Taxpayers in |
| job, check with a tax advisor or the payroll department | | | | the 10 percent and 15 percent tax brackets pay no |
| at work to make sure your W-4 is filled out properly at | | | | capital gains tax at all. |
| each job. | | | | That's scheduled to change in 2011. The top rate will |
| 3.) Convert your traditional IRA to a Roth. Now in 2010, | | | | return to 20 percent; the zero rate will revert to 10 |
| anyone can now convert a traditional IRA to a Roth | | | | percent. And with this administration and the party |
| retirement account. The $100,000 income limit has been | | | | controlling Congress, this could get worse. There is no |
| removed. | | | | guarantee they won't make retroactive changes, |
| If you decide this is the right retirement move for you, | | | | either. |
| note that you will have to pay taxes on the previously | | | | 9.) Watch out for rising income tax rates. The Bush |
| untaxed amounts in your traditional IRA that you | | | | tax cuts expire at the end of 2010. Tax rates go up |
| convert. The good news is you can choose to pay | | | | for higher income earners and the 10 percent rate is |
| half the conversion costs on your 2011 taxes and the | | | | eliminated for lower earners. |
| other half in 2012. | | | | Who knows what Congress will do in the light of trillion |
| 4.) Get tax benefits from increasing your home's | | | | dollar deficits, but keep an eye out and plan |
| energy efficiency. You can be more comfortable in | | | | accordingly. Do not be afraid to call your Senators and |
| your home and have some of the costs returned on | | | | Congressperson and let them know how you feel |
| your taxes with special tax credits. | | | | about tax hikes. |
| Homeowners can claim up to 30 percent of the first | | | | 10.) Watch out for health care changes. In light of the |
| $5,000 spent on qualifying residential energy upgrades, | | | | Massachusetts special election going to a Republican, |
| or up to $1,500 in tax credits. A solar home heating | | | | health care changes could jump off the fast track; but |
| system can get you even bigger tax credits. | | | | nevertheless there could be ramifications for you tax |
| Be advised, this might be the last year so if you need | | | | wise if something does finally pass. |
| to make home repairs, consider energy-efficient | | | | Keep your eye on this and stay out from under the |
| upgrades now. | | | | knife on this one! |
| 5.) Get that hybrid car now. The hybrid credit is good | | | | There is nothing like a good tax advisor, and it pays to |
| through 2010, but only with manufacturers that have | | | | be as informed as possible. Save money on your |
| not sold 60,000 eligible cars. So shop carefully to make | | | | taxes and choose an online tax preparation option that |
| sure the hybrid you are looking at qualifies. | | | | will get you every deduction you qualify for and your |
| 6.) See an Estate Tax Professional. Congress has | | | | largest refund. |