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Tax tips for the new year

December 29, 2011 12:00:00 AM PST
With the new year fast approaching it's time to think about reducing your income taxes. Here are year-end tax tips to help you find some deductions you may not know about.

If you think you're going to owe the IRS money at tax time, then you need to find some deductions fast.

Certified Public Accountant Susan Carlisle says number one, make some charitable donations now. But remember:

"You can deduct anything that's reasonable as long as you have a receipt," said Carlisle. "Anything over $249 these days requires a receipt."

Another thing you can do is open up an IRA through your bank, stock broker or mutual fund company.

If you're not covered by a retirement plan at work you can contribute up to $5,000, or up to $6,000 if you're 50 or older.

Need any new appliances or did you add solar to your home? Energy-efficient home improvements not only save on your utility bill but your tax bill too in the form of a more valuable tax credit.

"The government will allow you to take 10 percent up to $500 and give you an energy credit," said Carlisle.

If your income is less than $58,000, here's some good news: You can file your taxes for free. The IRS has teamed up with several companies like H&R Block that allow you to go online and file your taxes for free 24 hours a day.

Did you re-finance or buy a home this year? You're entitled to deduct the points you paid for your mortgage, but make sure you deduct them correctly without mistake.

Loan points are fully deductible upfront only on new mortgages. If you re-financed then points are deductible over the life of the loan.

And are you taking care of your parents these days? They could be a tax deduction.

"If you maintain a household for a parent, even if he or she is not living in your household, and you pay for more than half of his or expenses, you can take that dependent on your own tax return," said Carlisle.

Obviously to take advantage of most of these deductions, you need to act fast before the first of the year.

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