April may seem far away, but thinking about your taxes now can leave you with more money in your pocket later. Start gathering your receipts and records, and take advantage of every tax break you can.
Here are some ways you might be able to reduce your tax burden for 2011, from deductions for job-hunting and self-employment to medical expenses to energy savings to retirement funding.
Explore work-related and job-hunting deductions. Some job-hunting expenses if you’re looking for work in a similar field, or if you’re thinking about relocating to land a job in your area of expertise, may be deductible. And if you’re moonlighting from home and consulting between jobs, or work at home full-time, you might be able to deduct expenses if certain criteria are met. Things like dues to professional societies or payments for certification or licensure also may be deductible.
Track your medical expenses. It’s always good to monitor your medical bills for errors and overcharges. Also keep an eye out if your total medical expenses for the year will exceed 7.5 percent of your adjusted gross income. If you need to travel for medical reasons your travel costs are probably deductible, too.
Think energy savings. Certain energy-related home improvements, like additional insulation, will cut your monthly utilities expenses and your tax bill. Some energy tax credits, like that one, expire at the end of 2011; check to see what’s eligible via the Department of Energy.
Consider making retirement plan contributions. You have until December 31 to put money into your 401(k) or 403(b) plans. Any contribution here will reduce your taxes – you pay none on money you put into your tax-sheltered plan. For IRAs, the contributions deadline is April 17.
Find additional information at AARP.org/money/taxes, including free online calculators to help you save. For questions about your individual situation and what is deductible, consult a tax advisor or go to IRS.gov.
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