Even though the U.S. House of Representatives voted on Thursday to extend most of the tax cuts granted during Bush era, the political wrangling over this topic is far from over. The Senate is now taking up the matter and that means anything could happen. Regardless of what the politicians do, there are some year-end strategies that anyone can take to minimize their 2010 taxes and shore up their overall finances in the coming year.
Here are 10 such strategies recommended by the California Society of CPAs, the country’s largest professional, non-profit state association representing more than 34,000 CPAs in the area of tax, audit, accounting and consulting services such as personal finance.
1. TRIM YOUR SPENDING
Yes, it’s the holiday season. But that’s no reason to completely blow your budget. If you do, you’ll have a financial hangover come January 2011. Instead, create and stick to a budget to keep better tabs on your cash flow and avoid over-spending.
2. ADD MORE DOLLARS TO YOUR RETIREMENT SAVINGS PLANS
You say you “can’t afford” to contribute to your retirement plan on the job, or that you’re already doing enough? Think again. You can’t afford not to contribute, not when your future retirement security depends on it, and not when Social Security is on such shaky ground. So stretch a little bit. Even if you’re already contributing, add some more dollars to your 401(k) or 403(b) plan at work. You’ll get a tax benefit for doing so, and your employer may offer you a matching contribution as well.
3. REDUCE CREDIT-CARD DEBT
Would you like to have zero debt instead of worrying about those nagging credit card bills all the time? You can become debt free if you make a plan to eliminate credit card debt and stop making minimum payments on your accounts. Instead, get more aggressive about reducing those balances or consider whether it makes sense to do a balance transfer to a lower-interest rate credit card.