Finance & Enjoyment Blog

Reducing Your Tax Bill Before The End Of 2011

Despite only a few weeks left in 2011, there are still several things you can do to reduce your 2011 tax due.

  • The first thing you can do is maximize your 401(k)’s contributions from your paycheck. These deductions reduce taxable income as well as provide a great base for retirement. The max an individual can contribute for 2011 is $16,500 for people under fifty, and $22,000 for fifty and older.

  • Another thing you can do is claim any energy efficient appliances and home improvements made during the year. This credit will not be renewed next year, so if you’re planning any projects or purchases in 2012, you can save some money if you start them this year.

  • There is a possibility the option of deducting sales tax will not be included next year. Most people deduct their state income tax rather than sales tax, but if you live in a state that does not have an income tax, this could be a significant policy change. If you are planning on purchasing any large items in 2012, it may be worth it to buy it in 2011.

  • If you receive a large refund every year, you may be withholding too much from every paycheck. This may sound good, but really it’s nothing more than an interest free loan you are giving the federal government. You may need to adjust your withholding amounts so you get a larger portion each paycheck. The goal should be coming as close to zero for a tax refund each year.

If you have any questions or would like to hear more ways to save money in 2012, feel free to email, call, or stop by our office and we’ll be glad to help.

Posted in Your Financial House »

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