Two Ways You Can Still Reduce Your Tax Liability

January 6, 2012

While you may be busy cleaning up after the holidays – now is NOT the time to forget about your income taxes!  Even though 2012 is already here, you still have time to do a few things that will reduce your tax liability.  Whether it is your individual or business taxes, these two tips can help you keep more money in your pocket!

Maximize your traditional IRA contributions
You have until April 15, 2012 to maximize your traditional IRA contributions for 2011.  If you earned income in 2011, you can contribute up to $5000 of your earned income ($6000 if you are age 50 or older by the end of 2011).  If you are married and filing jointly, both you and your spouse can contribute up to $5000 each ($6000 if 50 or older) to your individual traditional IRA’s.  The amount of deduction you are eligible for is dependent upon whether you participate in a qualified retirement plan at your workplace.

Calculate your mileage
This is often a forgotten tax deduction for many people. However, the mileage expense for using your personal vehicle is deductible for medical treatment, moving expenses, service to a charitable organization, and business mileage.  The IRS Mileage Rate for 2011 is:

January 1st to June 30th
51 cents for every business mile
19 cents for every medical or moving mile
14 cents for every charitable service mile

July 1st to December 31st
55.5 cents for every business mile
23.5 cents for every medical or moving mile
14 cents for every charitable service mile

Want to streamline your business’s accounting in 2012? Contact Wallace & Associates today. We can help you get organized, keep up-to-date, and take advantage of valuable cost-saving strategies and tax deductions.