As 2010 comes to an end, it's time to think about getting your tax paperwork together and plan ahead for any tax changes that may be coming up in the new year.
Tax professionals suggest, if you're planning to make a charitable donation, do it now. You should also be going through your expenses from 2010 to identify anything you might be able to claim as a tax deduction.
It can help to have all your tax paperwork in one place, so Conway accountant Shirley Kennedy suggests getting ready to organize those tax forms that will soon start showing up in your mailbox.
"Any of your w-2's or your 1099's, k-1's and other such tax documents that come in," Kennedy says. "You would also need closing statements for both the purchase and sale of any real estate that you sold during the 2010 year."
If you're a business owner, Kennedy suggests investing in new equipment for your business right now, since you might be able to get a tax deduction of up to $500,000 dollars.
"So if you already know what equipment you need, and can get that placed in service by the end of the year, then you get the tax benefits for the 2010 year, plus you have that equipment to be more productive in the new year."
It's to your advantage to figure your 2010 taxes as early in the new year as possible, since you may qualify for a refund.
"The refunds go out based on when the return is filed, so the earlier you file, the sooner you get your refund," Kennedy said.
Kennedy refuses to offer refund anticipation loans to her clients, like the big chain tax preparers do. She says, just to get your money a couple of weeks in advance, the refund loans don't make sense.
"When you look at the interest rate that you ultimately are paying on those anticipation loans, it is really not a good financial decision."
Some taxpayers purposely have more taxes deducted from their paychecks than they have to, just so they can get a big refund check at the end of the year. Kennedy says that also doesn't make sense, since you're just giving the government an interest-free loan.
If you make your home greener before the end of the year, like adding insulation or energy efficient windows, you may qualify for up to $1500 dollars in tax credits.
For more information on tax preparation click here.