Advises to low your Taxes

Did you asked yourself this Question

What I Can do to Lower  Taxes ?.

One of the sections that I teach in the two-day real estate class is dedicated to tax strategies related to real estate. Although no investing decisions should be made based strictly on the tax consequences, it is a very important component. So one of the first things I would suggest you do is make sure you have a professional tax advisor that understands all of the different elements of your business, investing and personal finances.

Here are a few tips as we approach the end of 2010.

PLEASE MAKE SURE YOU SEEK THE ADVICE OF YOUR TAX ADVISOR REGARDING ANY OF THESE SUGGESTIONS.

If you're looking for additional deductions and expenses related to your business, here are few that you might consider making before the end of 2010.

Business Equipment: The Small Business Jobs Act of 2010 has increased the expensing of some capital assets. When you buy business equipment, you usually deduct the purchase price over several years. Section 179 of the tax code allows small businesses to take full depreciation in the year of the purchase, known as expensing. For 2010, you can expense up to $500,000 worth of equipment (about double the previous allowed limit). To get the deduction for this tax year, the equipment must be operating by December 31.

Cost of Education: To maintain or improve skills required in your current business.

Charitable Contributions: You can either donate cash or other items. Under the new Pension Protection Act, you will need a written receipt for all charitable donations. Many charities now accept credit cards. This allows you to make and deduct the donation this year but pay for it in 2011.

Convert to a Roth IRA: For 2010 only, taxpayers have the opportunity to defer income realized from converting a traditional IRA to a Roth IRA. They can spread that income over the 2011 and 2012 tax years. You don't have to use this special rule, though. If you expect to be in a higher marginal tax bracket in 2011 and 2012, you might want to elect to have all the income generated by a Roth conversion included in your 2010 income and pay the resulting taxes.

Re characterize a Roth Conversion: What if a Roth conversion you made earlier in 2010 wasn't a tax-wise decision? You can undo the Roth conversion by re characterizing the transaction, thus changing the account back to a traditional IRA. There may be other requirements.

Pr-pay Property Taxes: Re-pay (some or all) of 2011 taxes.

Make an extra mortgage payment: The extra interest you pay will be added to this year's mortgage interest by your lender, increasing your itemized deductions.

Medical expenses: You can take a deduction for medical expenses exceeding 7.5% of your adjusted gross income (AGI).

Max out your retirement savings: Contributions to retirement plans reduce your taxable income. A contribution to your IRA can be $5000, or, if over 50 years old, $6000 and you have up to April 15, 2011 to make the contribution for 2010.

Boosting your deductions is a great way of lowering your tax liability; you may also want to consider the income side of your taxes. Here are a couple of suggestions.

Defer income if possible: If you are self-employed or a business owner, you might elect to invoice customers in January so you don't have to include that income in 2010. Keep in mind that it may only make sense to defer income if you think you will be in the same or lower tax bracket next year.

Sell losing investments to offset capital gains: You can lower capital gains by selling securities that have lost money. Losses offset gains dollar for dollar and losses in excess of your gains can be deducted, up to $3000 dollars per year.

I strongly believe that success in business and investing starts with planning. I have witnessed many friends, family and students that have been surprised on April 15th by a tax burden they weren't prepared for, simply because of a lack of knowledge and planning.

Once again, please make sure that you contact your tax adviser to evaluate how these suggestions can best serve you.