by Mike Rush
Feb 04, 2012
Question for a CPA: OK, 2011 is over. Is there anything I can still do about my taxes?
Answer: Yes. You can actually get in the “way-back” machine and lower your tax bill for 2011 for an action you take in 2012!
What is it? A tax deductible IRA. Now this area has all sorts of caveats, so be sure you consult a professional before doing anything. If you (or your spouse, if you are married) currently do not participate in a retirement plan, there is no limit to the amount of income you can make in order to claim a tax deductible IRA contribution. If one spouse participates and the other does not, the one who does not currently participate might be able to claim a full deduction. If you both are currently participating, then the amount of income you are allowed to make and still have a deductible IRA contribution is much, much less.
Remember, you must have earned compensation in order to qualify. The IRA account must be established by April 17, 2012. It must also be funded by April 17, 2012. If you want to make a contribution, are a little short of cash, and have a large enough refund coming to you, one neat trick is to file the return early, get the refund and use all or a part of it to fund your IRA by the due date.
The above applies to employees, self-employed individuals, and small-business owners. The next idea is usually just for small-business owners and self-employed individuals.
If you purchased equipment in 2011, you can elect to take what is known as a Section 179 deduction, in which you can write off the total cost of equipment instead of depreciating it over several years.
Remember, all tax ideas are ALWAYS fact dependent and situation sensitive, so make sure you get accurate, knowledgeable assistance. Happy Tax Season 2012!