Year End Tax Planning…It’s Not Too Late

At this time of the year, I know that tax planning is first and foremost on peoples’ minds. O.K., maybe the second thing. The reality is that in the thick of your holiday shopping and family-get-together-planning, there’s still time to do some tax planning before the end of 2011. Is that cool or what?!

Selling investments at a loss-it’s the ultimate acceptance of defeat, and something for which denial is a strong factor. That investment you made in a stock or a mutual fund has tanked in value since you bought it. It hurts; I know, I’ve been there too. But the paper loss can save you money on taxes when you sell it. Capital losses in excess of capital gains can be deducted against other income on your tax return, up to $3,000 per year. For a person in a 25% marginal federal tax bracket, that means Uncle Sam will “subsidize” $750 of that loss, which could help take some sting out of it.

Retirement accounts-it’s still not too late to sock away money in a 401(K) or IRA, and get a tax deduction for 2011. Business owners can still set up certain retirement plans before 12/31/11 and fund the plan early in 2012.

Accelerate deductions-for taxpayers who are not expecting to fall into the Alternative Minimum Tax (AMT) in 2011, there’s still time to bunch deductions into 2011 for added tax savings. Making the 4th state estimated payment by 12/31/11 (instead of the due date of 1/16/12) can add to itemized deductions for 2011, as well as work related expenses (as a miscellaneous itemized deduction), or even elective medical costs. There are certain ‘adjusted gross income’ thresholds to consider for these, but if the numbers work, you can save a few bucks in tax.

Charitable contributions-cash contributions or even contributions of “appreciated securities” can give you a good bang for the tax deduction buck, and can still be done before year end. While we’re on this topic, I’d like to take a moment for a shameless plug, on behalf of my non-profit clients, and other organizations to which I have a connection (in alphabetical order, to downplay any favoritism!)

Darfur Peace & Development
Doorways For Women & Families
Habitat for Humanity of Northern Virginia
Homeward Trails Animal Rescue

College savings-if you need to save money for a child’s college education, establishing a 529 plan in the state in which you live will result in a state income tax deduction for amounts contributed to the plan.

I hope you found this information helpful, and please pass it along to anybody you know who can benefit from the information. If you make charitable contributions to any of the organizations I mentioned above, please let them know I pointed you in their direction.


Uncle Sam Owes You!

The other day, IRS announced that it has $153.3 million in undelivered tax refund checks.  There are 99,123 taxpayers who are due refund checks that couldn’t be delivered because of mailing address errors.  These undelivered checks average out to $1,547 per check, which (in my mind) isn’t chump change!

How the heck does this happen, you ask?  The usual culprit is IRS having an old expired address on record, and no address to forward to.  They will always deliver to the last known address that they have on record, and if you’re no longer there (and any post office forwarding order has expired), that refund check will be sent back.   If you believe that Uncle Sam owes you a tax refund that you haven’t received, go to IRS’s home page ( and click on the “Where’s My Refund” link.  You’ll need to enter information about the return that you believe you’re due a refund on (don’t worry, it’s a secure web page), and you’ll be informed of the status of that refund.

IRS suggests a couple of ways to make sure you always get the refund due you.  The first is to notify them when you move, by updating your address on Form 8822 (Change of Address), which can be found at .  Alternatively (and preferred by IRS) you should file your tax return electronically, and choose to have your refund directly deposited into the bank.  You can speak with your favorite CPA about all of this.

In the same announcement, IRS also reminded taxpayers that they do not contact taxpayers by e-mail about pending refunds, and do not ask about personal or financial information through e-mail.  If you ever receive an e-mail from a sender professing to be the Internal Revenue Service, do not reply, do not open any attachments, and do not click on any links; it’s a phishing scam.  So be careful!

Please pass this article along to everybody who’s a taxpayer (probably everybody you know), because you never know who could use an extra $1,547 (average) in their pocket, or bank account.  Do you have any good stories about undeliverable or misplaced IRS refunds or correspondence?  Please leave a comment, and also let me know if you have any topic you’d like to see me write about in the future.


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