10 Tax Tips For The End of Year

I met with my tax guy last week and he got me thinking about some end of year tax moves I need to make. Here are a few tax tips for individuals and a few for you small business owners as well.

1. Ask your boss to pay your Christmas bonus after the new year. That way you will pay taxes on it in 2011 and not 2010.

2. Sell off loser stocks this year and sell winners after the new year to reduce capital gains exposure

3. Pay your personal property taxes before year end

4. Make charitable contributions before the end of the year

5. Pay as much towards any outstanding medical bills in 2010

6. If you are a high-income earner, consider converting your traditional IRA to a Roth IRA.

7. Pay January’s mortgage payment in December so you can deduct the interest in 2010.

8. Contribute to your retirement plan (401k, IRA, etc)

9. If you are self-employed, stock up on office supplies and make other necessary purchases before year end.

10. If you have an FSA, make sure to use up all the funds before 2011. Also, stock up on OTC meds, because one of the 2011 FSA changes is that you will no longer be able to use it for OTC meds unless you have explicit instructions for use by a doctor.

Looking for more tax tips?

Here are a few other articles if you are looking to dig in deeper..

Got any year-end tax tips of your own?

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  1. Jonathan

    I feel that it’s completely unfair that OTC meds are not going to qualify as valid HSA expenses now. It’s an obvious fact that they traditionally cost less than regular prescriptions, and are much easier to obtain, especially for elderly people. Can anyone give a valid reason as to why this restriction should apply?

  2. Janice

    I may just go ahead and pay my January 2011 mortgage this month!! 😀

  3. Financial Samurai

    Howdy Bob, good reminder on paying property tax by Dec 10 and perhaps paying January’s mortgage in December!

    Hope all is well.


  4. Julie H

    If you must take money from an Health Savings Account (HSA) for non-medical purposes, do it in 2010. You’ll still pay taxes and a 10% penalty, but beginning in 2011 it will be a 20% penalty.

  5. Pete

    That’s so funny, great minds think alike Bob! My article today? “10 Tax Deductions And Credits That You Can Still Claim In 2010”. My favorite tips? pre-paying the property taxes and mortgage before year’s end. Something a lot of people might not think to do..

    • Bob

      agreed! – on both counts!

  6. Matthew Denos

    Hi Bob,

    My goal is to make my necessary business purchases before the end of 2010 to get some tax deductions. Thanks for your tips.

  7. Del

    I do not completely agree with these end tax year tips, and following that advice blindly could disappoint you at tax time. I personally had too much income in 2010 to make itemizing my deductions pan out better than to take the standard deduction, specifically losing much on medical deductions in. Since I anticipate lower income next year, I am intentionally pushing that into next year to optimize my taxes for 2011. EXAMPLE: If your income was too high, you will want to defer (item 5) any outstanding medical bills in 2010 until January of 2011. You MUST hit 7.5% of your income AND ITEMIZE your deductions, or there is no tax incentive to pay these bills off early.

    • Bob

      Del, you are right – everyone’s situation is unique and the best way to find exactly what would be best for each persons situation would be to consult a tax advisor.