Cutting Taxes Throughout the Year

Posted on: May 18th, 2010 by

Charitable Contributions - CPA Rockville - Financial PlanningIf you managed to claim every possible tax break on your 2009 return, give yourself a hand.  That’s no reason to stop there though;  there is so much more you can be doing to rack even bigger savings throughout the year with the help of thoughtful tax planning.  For example, if you got a big tax refund this year, it means that you’re having too much tax taken out of your paycheck every payday.  You can file a new W-4 form with your employer to ensure that you get more of your money when you earn it.

If you plan on making charitable contributions in 2010, put away your checkbook. Consider giving appreciated stocks or mutual fund shares that you’ve owned for more than one year instead of cash.  Your charitable contribution deduction is the fair market value of the securities on the date of gift, not the amount  you paid for the asset, and you will never have to pay tax on the profit.  Don’t donate stocks or fund shares that lost money though.  You will be better off, in the long run, selling the asset, claiming the loss on your taxes, and then donating the cash to charity.  You get to use it as two deductions then.

Also, if you plan on doing charitable work, keep track of what you spend while you are doing it.  Whether it be stamps to mail letters, ingredients to make food for the homeless, or even the number of miles you drive for the charity work, it is all deductible as a charitable contribution.  The total can be added into your charitable deductions next year, cutting your tax bill even more.

*With regard to charitable donations/contributions, make sure you keep careful records of them for your CPA so you can qualify for the full deduction amount without any red flags being raised.



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