Tuesday Tax Time: Tax Planning for 2010

Now is the time to begin preparing for next year’s tax time.  Here are some things you can do now so that your CPA won’t fuss at you on April 15, 2011:

1.  If you claim mileage, begin keeping a log now.  The tax return actually asks if the mileage claimed was “written.”  You want to answer “yes,” so begin keeping a log now (and you shouldn’t lie).  Keep a log that lists your mileage by client served, where you went, the date, and the beginning and ending odometer reading for each trip.  By the way, the mileage deduction is 50 cents per mile beginning January 1, 2010.

2.  If you claim the home office deduction, your CPA will need all of your insurance, utilities, phone, etc. that you spent in your household.  Begin tracking them now (maybe use a personal financial tracking system to do this!).

3.  Think about switching your traditional IRA over to a Roth IRA in this new year.  You can pay the taxes later (in 2011 and 2012), and you’ll have free money when you retire.  But before you do, read this three part series I did on the things to think about before doing so.

4.  If you have a business, begin keeping track of your profit now.  Your profit is what drives your year-end tax bill.  When you start making a lot of money, the first person to call should be your CPA (well, maybe your spouse should be first).  There are things we can do during the year to eliminate the taxes to be paid by April 15, 2011.  And if you don’t have an innovative online solution for your business accounting software – call us.  We do that.

5.  You’ve got time to start working on a new baby = new tax credit and personal exemption for 2010!

Make it a happy new tax year!

Thanks, Jason M. Blumer, CPA

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