Charles E. Schneider CPA, Ltd.
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Personal Tax Saving Questionnaire

  

2010 Tax-Saving Ideas  

  
       

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   This list contains 29 questions that aim to uncover opportunities to reduce
your income tax bill for 2010.  For any question you answer yes, click the
Tax Strategy button to the right to view a possible tax saving idea.  For 
further information on these ideas,  CLICK HERE.		  

 

    

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   Please read the   DISCLAIMER  before using this tool.  
     
       
       
    1)

Do you own a vacation home?   

 
         
    2) Are you currently holding a significant amount of cash in a daily interest bearing account such as a money market fund?      
 
         
    3) Do you own old limited partnerships or other     
    passive type investments which have little or no    
    value?    
         
    4) Do you own securities in a personal account (not an IRA or employer-sponsored retirement plan) that could be sold for    
    a loss?  

 
         
    5) Will your total income this year be significantly    
    higher or lower than it was in last year?    
         
    6) Are you eligible for a year-end bonus at work?

 
         
    7) Do you have personal or real property that you     
    are planning on selling?  

 
         
    8) Are you planning on selling mutual fund shares    
    held in a personal account?  

 
         
    9) Do you have children under eighteen years old?  
         
  10) Do you have an IRA account?    
         
  11) Are you currently paying college tuition or other    
    post-secondary education costs for yourself or    
    for a dependent?    
         
  12) Are you paying interest on student loans?     
         
  13) Did you sell your home this year?    
         
  14) Did you purchase a home this year?    
         
  15) Did you refinance your mortgage this year?     
         
  16) Are you paying any interest that is not tax    
    deductible? (Credit cards, auto loans, personal    
    loans, etc.)     
         
  17) Are you actively making gifts to reduce the size    
    of your estate?    
         
  18) Do you have income from self-employment    
    this year?     
         
  19) Does your employer offer a cafeteria plan (also    
    known as flexible benefits or Section 125 plans)    
    to pay certain expenses on a pre-tax basis?   
         
  20) Are you considering LASIK eye surgery?    
         
  21) Do you make monthly mortgage payments?   
         
  22) Do you use your auto for either medical or     
    charitable purposes?    
         
  23) Do you own personal property you no longer need    
    or use?    
         
  24) If you regularly make charitable contributions, do     
    you have appreciated securities that could be used    
    instead of cash?     
         
  25) Have you made contributions in excess of $250    
    to one charity?     
         
  26) Do you typically make charitable contributions    
    with either cash or a check?     
         

 

 27) Are you paying tuition for yourself or for dependents?    
         
  28) Are you paying any of the following costs:  day care, medical costs not covered by insurance, all or a     
    portion of the cost of your employer provided health    
    insurance coverage?   
         

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Personal Tax Planning Questionnaire

   DISCLAIMER    
         
    This document is intended to provide general information on various tax and financial subjects. It is not an exhaustive treatment of such subjects, nor does it create a business or professional services relationship.  The information contained herein is not intended to constitute accounting, tax, investment, legal or other professional advice or services.  The material discussed should not be acted on without obtaining professional advice appropriately tailored to your individual needs and circumstances. Your use of this document and the information it contains is at your own risk.    
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Personal Tax Planning Questionnaire

   Planning Idea:    
         
    1) You can collect rent from a vacation home for up to 14     
    days in a calendar year and pay no tax on the rent.    
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Personal Tax Planning Questionnaire

   Planning Idea:    
         
    2) You can eliminate taxable interest income for the    
    remainder of 2009 by transferring money market type    
    investments to short-term investments such as bank    
    CD's or U.S. Treasury bills which do not pay interest    
    until next year.    
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Personal Tax Planning Questionnaire

   Planning Idea:    
         
    3) If you own limited partnerships or other passive    
    investments with little or no value, consider selling them    
    prior to the end of the year to allow you to deduct     
    accumulated losses which may have been suspended    
    due to the passive activity rules.    
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Personal Tax Planning Questionnaire

   Planning Idea:    
         
    4) Consider selling securities which would produce a    
    capital loss.  Capital losses are first offset against capital    
    gains.  If there is an excess loss left over, you can    
    generally deduct up to $3,000 against your ordinary     
    income in the current year.  Remaining losses are     
    carried over to future tax years.  If you sell a security    
    which you intend to reacquire, wait at least 31 days     
    before buying it back.  If you  do not wait for this 31    
    day period, the "wash sales" rules will not allow you to    
    deduct the loss.    
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Personal Tax Planning Questionnaire

   Planning Idea:    
         
    5) If your income in 2009 is going to be significantly    
    higher than your 2008 income,   review your withholding    
    and tax estimates for 2009 to make certain you have     
    enough taxes paid in to avoid underpayment penalties.     
    You may want to add extra state withholding or estimates    
    to prepay your entire 2009 state tax bill.  Doing this will    
    give you a Federal deduction for state taxes this year    
    instead of  waiting until you file your 2008 tax return.     
         
    If your 2009 income will be lower than your 2008    
    income, you may want to  see if it makes sense to prepay    
    tax deductible costs which are subject to  limitations based    
    on adjusted gross income.  (Medical costs or employee    
    business expenses are some examples.)   You may also want to 
consider converting a portion of your traditional IRA account to
a Roth IRA.		    
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Personal Tax Planning Questionnaire

   Planning Idea:    
         
    6) If bonuses are a significant part of your compensation, see if    
    your employer can  defer payment to you until the new year.     
    This will allow you to defer income tax  on the money for a year.     
    The timing of the payment must be your employer's decision, not    
    yours, because it is taxable to you as soon as your employer    
    makes it available.    
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Personal Tax Planning Questionnaire

   Planning Idea:    
         
    7) Consider using the installment method of reporting sales of assets    
    near year-end.  Collect a small down payment before the year    
    ends and collect the balance of the sale in the new year.  This will    
    defer paying the tax on most of the gain until the following year.     
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Personal Tax Planning Questionnaire

   Planning Idea:    
         
    8) When you sell mutual funds in a taxable account, there are several    
    ways to determine  the cost basis of your shares for tax reporting    
    purposes.  Generally, you want to choose the method which    
    reports the highest cost basis thus reducing your taxable gain.  The    
    specific identification method allows you to pick the highest cost    
    shares.  You need to  keep detailed records of your fund    
    transactions to use this method.  Also remember to add shares    
    acquired by reinvested dividends and capital gains to your cost    
    basis.    
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Personal Tax Planning Questionnaire

   Planning Idea:     
         
    9) If you have children under eighteen years old, there are several tax    
    planning options available.  You can fund Education IRA's which    
    allow you to accumulate funds for education costs free from tax.    
    The maximum annual contribution to an education IRA has been    
    increased to $2,000 annually for each child, beginning in 2002.     
    Before 2002, the limit is $500 per year.  Also, education IRA     
    funds can now be used to pay for elementary and secondary     
    education costs.  Contributions can now be paid by the due date    
    of your tax return (usually April 15th).  The old deadline was     
    December 31st.      
         
    Children are also allowed to earn investment income tax free for the    
    first $900 in a  calendar year and at a low tax bracket for the next    
    $900 in a calendar year.  Also, taxpayers whose income is within    
    certain limits are eligible for child tax credits of  $1,000 per child.    
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Personal Tax Planning Questionnaire

   Planning Idea:     
         
  10) If you have a traditional IRA account, consider converting it to a    
    Roth IRA.  If you  meet the requirements for tax-free distributions,    
    you will never have to pay income tax on the balance in your Roth    
    IRA.  Also, Roth IRA's are not subject to required  minimum    
    distributions when you reach age 70-1/2.  Paying income tax now    
    on the current value of your traditional IRA account is the price you    
    have to pay to do the conversion.  Your adjusted gross income    
    must be under $100,000 to be eligible to do a conversion.  (For    
    this calculation, adjusted gross income does not include the           
    value of your IRA added to your taxable income.)  Roth IRA    
    conversions are  especially attractive for younger taxpayers and    
    those currently in low tax brackets.      
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Personal Tax Planning Questionnaire

   Planning Idea:     
         
  11) If you are paying post-secondary tuition or fees, you may be able    
    to take advantage of  education tax credits or deductions that began     
    in 1998.  Known as the Hope Scholarship Credit and Lifetime    
    Learning Credit. Depending on your personal situation, delaying or 
accelerating payments may maximize the available tax credits.		    
    The credits are reduced or eliminated if your income is over    
    certain limits.  Be sure to inquire if you qualify for either of these    
    credits.     
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Personal Tax Planning Questionnaire

   Planning Idea:       
         
  12) Student loan interest  got easier to deduct with the passage of     
    the 2001 tax act.  If you pay interest on student loans, you may be    
    able to deduct some or all of it (up to a maximum of $2,500) on    
    your  tax return, even if you don't itemize deductions.  The    
    main limitations on this deduction were based on income and     
    length of the loan.  The law enacted in 2001 raised the income    
    limitation, allowing people with higher incomes to deduct    
    student loan interest.  Also, it eliminated the requirement that    
    you had to be within the first sixty months of required interest     
    payments on the loan to take a deduction.  These more liberal    
    rules are effective for interest paid after 2001.  Be sure to     
    inquire about this deduction.      
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  13) The  tax law passed in 1997 makes it much easier to sell your    
    principal home with no tax consequences.  If the house you sold was    
    your principal residence for at least two of the five years prior to the    
    sale, you are not taxed on up to$250,000 of gain if you are single     
    and $500,000 if you are married filing a joint tax return.  Even if you     
    do not meet the two year threshold, there are exceptions which still    
    allow you to exclude some portion of the gain if you had to sell for    
    job, health or family circumstances.     
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  14) If you purchased a new residence this year, check to see if you paid    
    any points on the mortgage.  Points paid on a home purchase are    
    fully deductible in the year paid.  You can deduct the points even if    
    the seller agreed to pay them.   If you had points on a previous    
    mortgage which you were writing off over the life of that mortgage,    
    you can deduct the remaining balance of those points since the old    
    mortgage was paid off.    
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  15) If you refinanced your mortgage in 2009, check to see if you had points on the previous mortgage which you were deducting over the life of the old mortgage.  This would typically be the case if your previous mortgage arose from a re financing.  If this is the case, you can deduct the remaining balance of the points on your old mortgage.  This deduction is commonly missed by tax preparers. If you paid points on your new mortgage, be sure to start deducting them over the life of the new mortgage.    
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  16) If you are paying interest which is not tax deductible, (auto loans, credit cards, etc.) consider using a home equity loan to consolidate these debts into one payment which will likely be tax deductible.  Chances are the home equity loan will have a lower interest rate and the tax deduction will make the effective interest rate even lower.     
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  17) If you are making gifts to reduce the amount of your estate that will be subject to estate taxes, make your gifts for 2009 before the year ends.  If you make gifts by check, make sure your recipients cash the checks before the end of the year.  Also remember that payments you make directly to your recipients educational institution or health care provider do not count against the annual $13,000 gift limitation.     
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Personal Tax Planning Questionnaire

    Planning Ideas:       
         
  18)

Are you reporting your self-employment income on  federal schedule C?  If you are reporting a significant amount of schedule C income, you may want to consider the advantages of incorporating your business.  You can substantially reduce your self-employment tax as well as reap other tax advantages.                              

How would you like to take a tax deduction for up to 20% of your self-employment income?  You can do this by opening a retirement plan especially for self-employed people.  In fact, you can take a tax deduction for 2009 and wait until 2010 to actually put the money into the retirement plan.  Caution:  these type of plans may        require that the documents to start the plan must be executed before the end of the year.  

If you need equipment for your self-employment business, you may be able to deduct the entire cost in the year of acquisition instead of depreciating it over several years.  Up to $250,000 of equipment can be purchased and immediately deducted in 2009.                           

    
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  19) If you participate in an employer cafeteria plan, review your account before year-end checking for any deferred amounts you have not already used.  remember, the use it or lose it rule applies.  Get those new glasses or contact lenses before the year ends to avoid forfeiting some of your elective deferrals.  If you had qualifying expenses (medical, child care during 2009 in excess of your elective deferrals, consider increasing your elective deferrals for next year.  These plans are excellent tax breaks, use them as much as you can.      
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  20) The IRS recently announced that LASIK eye surgery costs (to correct vision for near-sightedness)  will be allowed as a medical deduction.  If you have a flex benefits/cafeteria plan where you work, you can set aside pre-tax dollars to pay for this procedure.  That's like getting a 40% discount!  Since this procedure is not done on an emergency basis, its easy to plan for.  If you've already done it, make sure to consider the cost when calculating your medical itemized deductions.      
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  21) If you are like most people, you pay your monthly mortgage payment sometime around the first day of each month.  How would you like to pick up an additional deduction equal to one month's interest on your mortgage?  Here's how to do it.  Pay the mortgage payment you normally would pay in early January before the end of December.  Don't wait until the last few days of December because your mortgage company may not include the interest on your annual form 1098 for 2009.  By doing this, you can legitimately deduct 13 months of mortgage interest expense in 2009.      
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  22) If you used your car for medical or charitable purposes, add up the mileage pertaining to these activities.  Medical mileage (trips to the doctor, dentist, hospital, etc.) is tax deductible at a rate of $0.24 per mile.  You can deduct mileage for charitable purposes at a rate of $0.14 per mile.      
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  23) Clean out the closet/attic/basement.  Donate usable household items to your favorite charity before the year ends.  You are not required to provide additional substantiation in your tax return for non-cash donations under $500.  Nevertheless, be sure to get a receipt from the charity showing what you gave and the value.     
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  24) If you own assets outside of a retirement plan which have appreciated in value (stocks, mutual funds, real estate, collectibles) and you normally contribute to charity, consider donating the appreciated assets instead of cash.  (You need to have owned the appreciated assets at least one year.)  You will get a tax deduction for the fair market value of the asset and you will not have to pay the capital gains tax on the difference between your cost and the fair market value.     
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  25) If you made contributions of $250 or more in one payment, be sure the charity gives you a written acknowledgment of the contribution that states you did not receive anything of value for your contribution.  A cancelled check is no longer adequate proof for contributions in excess of $250.   As of 2008 ALL charitable contributions require written confirmation
from the charity.  		    
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  26) Consider making charitable contributions with a credit card.  You can deduct the contribution in the year it was charged to your card even though you do not pay the card balance until the following year.      
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  27) If you are currently paying college tuition for yourself or for your dependents, it may be advantageous to prepay tuition due in 2010 before the end of 2009.  There are two tax credits or a deduction available to middle income taxpayers based on post-secondary education payments made during the calendar year.  Under some circumstances, "loading" tuition payments into one year may produce a higher tax saving than spreading the payments over two years.    
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Personal Tax Planning Questionnaire

   Planning Idea:       
         
  28) If you are paying any of these type of costs, use your employer's cafeteria plan (also called Section 125 plan or flex benefit plans) if available.  These plans allow you to pay these costs on dollars you earn without being taxed by federal income taxes, state income taxes, FICA and medicare tax.  This is just like getting a price cut of 30% - 40% or more off the price of these items.  If your employer does not have one of these plans, suggest they look into starting one.  Employers save the FICA & Medicare tax costs on earnings that their employees put into these plans.      
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Personal Tax Planning Questionnaire

    Planning Idea:       
         
  29) If you are considering getting married in the near future, consider waiting until the new year.  The "marriage tax penalty" may apply when both spouses have income and deductions.  This means you will pay more tax as a married couple filing a joint return than you would pay as two unmarried singles filing separate returns.  If you get married any time during the year, you are considered married for the entire year for tax filing purposes.  Tax law changes enacted in 2001 provide limited relief from the marriage tax penalty, although mainly for low income taxpayers.      
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