Still time for contributions

Published 1:54 am Friday, December 30, 2011

As the clock ticks ever onward toward 2012, it’s almost time to begin thinking about the January task of compiling tax information.

And it’s not quite too late to take actions that could affect what you’ll owe the IRS in April.

CPA Gail Hayes of Rabren, Odom, Pierce and Hayes said tax-deductible contributions to charities and extra mortgage payments are two ways taxpayers can still decrease deductions.

“A deductible contribution by check is considered delivered the day you mail it and if by credit card…the year of the charge,” she said. “Remember the importance of having the proper records required to support cash and non cash contributions claimed.”

Some charities also accept online payments.

The interest from an extra mortgage payment also is tax deductible, but the payment must be posted in 2011, she said.

“An extra mortgage payment could increase itemized deductions with the additional interest paid, but would need to be received and posted to your account by the mortgage company before year end so it will be reported as paid in 2011 on the form 1098 mortgage interest statement,” Hayes said. “This could still be done if paying on line with a post date before Jan. 1, 2012, and the company credits payment as received per the post date.

“That is how I pay my mortgage payment so I could make an extra payment through Saturday and the interest paid would be credited to me for year 2011 as long as I have a 2011 post date,” she said. “One needs to consider whether they need the extra deduction in 2011 or will they benefit more next year, in case they have an income increase or lose a dependent.”

And, if investors act quickly, they also could make changes today that could affect their taxes.

“A capital loss could help offset capital gains and the excess loss offset up to $3,000 of other income,” Hayes said. “It’s a good time to look at those investments and maybe sell one for a loss if needed before year end. Also, current favorable long-term capital gain tax rates make it a good time to sell those long-term investments.”

The Internal Revenue Service also released tips for taxpayers this week.

“In order to claim certain benefits on your 2011 taxes, you need to take action no later than Dec. 31,” said IRS spokesman Dan Boone. “Taking steps now could save you money when you file your taxes next year.”

For instance, there’s still time to contribute to retirement accounts, like 401(k) plans or similar workplace retirement programs. Those payments must be made by Dec. 31. However, taxpayers have until April 17, 2012, to set up a new IRA or add money to an existing IRA and still have it count for 2011. A taxpayer normally can contribute up to $5,000 to a traditional or Roth IRA, and up to $6,000 if age 50 or over.

In addition, the qualified charitable distribution allows individuals age 70½ or over to exclude up to $100,000 from gross income that is paid directly from their individual retirement accounts to a qualified charity. The excluded amount can be used to satisfy any required minimum distributions that the individual must otherwise receive from their IRAs in 2011. This tax benefit is currently set to expire after Dec. 31, 2011.