For the Individual:
• Charitable contributions are deductible! Did you know that you are able to donate securities that have appreciated and take the full amount of the deduction without paying taxes on the gain? We advise that if you have securities, though, that have decreased in value to sell them first and donate the cash value as you can deduct the loss.
• The Alternative Minimum Tax fix that was put in place will be expiring at the end of 2011, unless Congress extends it. If you will be affected by this tax, you may want to pay your property tax and state income taxes before 2012 to get the deduction.
• Do you pay qualified education expenses? The American Opportunity Education Tax Credit runs through 2012. To be able to receive the full amount of the $2,500 credit you must have paid at least $4,000 in qualifying expenses. If you have already paid that much, you may consider waiting until after January 1st to pay for the spring semester to try to qualify for the credit again in 2012. There are income limitations for this credit, so it may not be available to everyone.
• The adoption credit was increased to $13,360 for 2011. It was also made refundable which may benefit you if you have higher income and before may not have been able to take the whole credit. The adoption must be finalized by December 31, 2011 to be eligible.
• If you need to pay for qualified education expenses, you may want to think about taking the funds from your IRA. Although the amount withdrawn will be taxable, you will not have to pay the 10% early distribution fee.
For the Small Business:
• Section 179 Depreciation limitations have been increased to $500,000, so if you are planning to purchase any new assets for your business, you may want to do so before December 31st and take advantage of the expressed depreciation.
• Vehicles weighing over 6,000 pounds that are used for 100% business will qualify for 100% deduction if placed in service within 2011.
• Has your business hired any new employees? If you hired a qualified unemployed worker after February 3, 2010, but before January 1, 2011, retained the worker for at least 52 consecutive weeks, and have a signed Form W-11, you may qualify for a credit on your 2011 tax return of up to $1,000 per worker.
• Leasehold Improvements that would typically be depreciated over 39 years, qualify for 100% deductions this year if it is completed and put into use before the end of 2011.
• There is a tax credit called “The Returning Heroes Credit” which provides incentive for businesses to hire unemployed veterans. There is a maximum of $5,600 tax credit for hiring long-term unemployed veterans and up to $2,400 for hiring short-term unemployed veterans. The Wounded Warrior credit gives up to $9,600 for hiring unemployed veterans with service-related disabilities.