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There are many ways to save on income taxes. In this article, I will outline five of the easiest and best ways to save you money. You should plan your income tax well before the end of the year. Otherwise, you will overlook several important opportunities. Depending on your situation, these may include professional help, taking action before December 31st, selling losing stocks and other securities, maximizing pension fund contributions, and filing whether you are legally required to or not.

1) Find Professional Help:

If you file your own return, you should at least get your return examined by a tax professional. Our firm does reviews for no charge, and additionally, perhaps there are a number of firms in your local area that may go over the return for you at no charge. In any event, and even if you need to compensate someone to look at your return, get it reviewed.

The IRS estimates that around 50 percent of all tax returns submitted in the United states happen to be done by the taxpayers on their own. Of those returns, they are 18 times more likely to have mistakes than the tax returns that are done electronically by Enrolled Agents and CPA's. What you do not need is an IRS audit or even a sequence of letters from the IRS questioning everything you did on your taxes.

2) Take Action Prior to December 31:

If you pay in the month of January for December expenses, you will forfeit the deductions on the current year's tax return. Hence, take some time to evaluate your position for your tax deductions for the year 2010 and pay expenses in December to get the deductions. If you can't come up with the funds, in that case use a credit card. Both of these are appropriate for deductions. A charge card is the only situation in which you can take a deduction in the current year and pay at a later time.

Additionally, bear in mind that IRA's can be paid by April 15 of the following year to have it be deductible on the current year's tax return.

3) Sell Losing Securities:

Whenever you are holding securities which are in a losing predicament, you could think about trading them prior to December 31. You can write off as much as three thousand in deductions from your W-2 wages. However, if your losses are more than three thousand, you can carry forward the losses to upcoming income tax years until it's exhausted. See your Enrolled Agent or CPA for guidance.

4) Maximize 401k or 403b:

Whenever you are given a W-2 wage and your organization has a deferred contribution plan, such as a 401k plan, you should increase the contributions from your paychecks. You do not pay tax on the money taken out in these programs. Additionally, if your employer contributes to the program for you, that's better yet.

If you think you can't afford it financially, then consider altering your wage deductions and adjusting your W-4 with your company. If you desire, you can claim as many as ten dependents with regard to your taxes withheld. This will keep your after tax pay the same, and at the same time, save on taxes because of the 401k deduction plan.

5) File a Tax Return Even when You aren't Required To:

If you happen to be one of the lucky souls on this planet which owe zero taxes, file a tax return anyway. Why? Simply because if you do not file a return, that return is accessible indefinitely for the IRS to examine or change should they choose to do so. When you submit a zero income tax return that the Internal Revenue Service usually doesn't prefer to get, do it at least by the end of the year. After three years, neither the government nor you can change or alter the return filed.

Eileen E. Jacobs is an income tax and accounting consultant in Las Vegas, NV.

http://www.taxes-phd.com

Eileen's Blog:

http://eileenejacobs.wordpress.com

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