By Jonnelle Marte
There are less than five days left in 2010 – five days to take your stock market losses, donate to charity, and otherwise manipulate your 2010 tax bill. Now that the tax brackets and capital gains tax rates are staying the same, much of the typical year-end tax advice still applies. But there are some strategies that taxpayers may overlook, and others that may be more appealing this year than in the past. Here, from around the web, a roundup of some of the best moves you can make – for the next five days, at least:
Defer income. This is an age-old strategy, but this year, we mean it: In 2011, taxpayers will be subject to a lower payroll tax. With the Social Security tax rate dropping to 4.2% from 6.2% for wages earned in 2011, taxpayers have an extra incentive to push income into the New Year. Self-employed workers can ask clients and customers to pay their bills after January 1, and employees may be able to ask their employers to wait before awarding bonuses or stock options.
Give from your IRA. The new tax law reinstated the ability of taxpayers older than 70-1/2 to donate up to $100,000 of their IRA assets to charity annually, and made the deduction retroactive for 2010, with an extension through 2011. Donations made in January 2011 will count as 2010 donations, up to the $100,000 donation limit and as 2010 required minimum distributions. Any other donations made next year will count for your 2011 donation limit and 2011 required distributions.
Write off your job search. Silver lining: Your job situation and the depreciation of some of your belongings might help you qualify for some less popular deductions. You can deduct job-search expenses, if you’re looking in your current field, even if you don’t land the new job. (Those trying to switch careers, searching for their first job or starting a search after a long spell of unemployment don’t qualify, according to Investopedia.com.) In some cases, you can also deduct the depreciation of electronics you use for work, such as your home computer or cellphone.
Medical expenses. It’s always a good idea to use all the funds in your flexible spending account because you lose any money that hasn’t been used by the end of the year. But next year, as SmartMoney.com has reported, you won’t be able to use your FSA for over-the-counter medications without a doctor’s prescription. With those extra 2010 FSA dollars, buy the extra big bottle of aspirin.