Although the last day of 2010 isn't until tomorrow, many businesses and government offices will be closed Friday, Dec. 31.
That means you've just got today to make some last minute tax moves. Here are some suggestions.
Sell your investment losers: Need some capital losses to offset capital gains? Call your broker now and dump those dogs.
Not only could they wipe out any taxable 2010 profits, up to $3,000 in excess losses can be used to reduce your regular taxable income.
Even if you didn't sell any assets for a profit this year, if you have mutual funds, you might have capital gains distributions. And yes, you could have those gains even if your fund's overall value is lower.
These distributions are taxable, but any capital losses you realize this year can be used to offset them, too.
However, capital losses won't lower your tax bill on any qualified dividends that are taxed at the lower capital gains rate.
Open a Keogh: If you're self-employed and want to open a Keogh retirement account, you must do so by the end of the year. Again, since many offices will be closed this Dec. 31, set that up today.
As evidenced by the Dec. 31 deadline, a Keogh plan has more administrative burdens and generally higher upkeep costs than other self-employed pension plans.
But Keogh contribution limits are higher, making the option popular for higher-income earners.
The good news is that you don't have to make your retirement account contribution today. Thank goodness, since you just had a very Merry (and expensive!) Christmas, right?
You still have until the April filing deadline (or until October if you get an extension) to make your 2010 self-employed retirement account contribution.
But with a new Keogh plan, the actual account must be established in the tax year for which you're contributing.
Convert to a Roth: If you want to spread any taxes due on the conversion of a traditional IRA to a Roth IRA, you'll have to make the switch by year's end.
You'll still be able to covert accounts in 2011 and beyond regardless of your income. But only 2010 conversions will allow you to pay half the conversion taxes in the 2011 tax year and the other half in 2012.
Of course, don't just assume that a Roth is right for you. Fellow personal finance blogger Joe Taxpayer examines why you must consider your expected retirement income in evaluating which individual reitrement account is best for you.
Spend your FSA money: If your workplace benefits year ends on Dec. 31 and you have money left in your medical flexible spending account, or FSA, you'll want to spend it in the next couple of days or you could lose it.
Some employers allow a grace period through March 15 of the next year for eligible medical expenses to be filed against the prior year's FSA amount. But just in case yours doesn't, the easy way to use up this money is to stock up on over-the-counter medications.
Remember, 2010 is the last year that you'll be able to easily use FSA money for OTC drugs.
Other, less pressing, tax break options: Some other year-end moves allow a bit of leeway.
You can, for example, pay your January mortgage now, as well as your real estate taxes and count that interest and tax amount as 2010 itemized deductions.
The date on the check generally suffices, although you might have some explaining to do if your mortgage holder doesn't register your early payment until next year and doesn't include the interest paid in your 2010 Form 1098.
You also can donate to charity.
You need to drop off any actual items, like household goods or clothing, at the charity's offices today or tomorrow to have the gift count toward the 2010 tax year.
But if you prefer to send a check or make a credit card contribution, those financial gifts will count as 2010 deductions (again if you itemize) even if the charity doesn't cash the check or the charge doesn't show up until next year.
I know this is a lot to think about as you're also trying to figure out just what you'll wear to the New Year's Eve party, but take a few minutes to look at whether these options apply to you.
Some of these year-end tax moves could give you reason to celebrate again when you file your 2010 tax return and owe the IRS less than you expected.
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