4 Tips To Help You Save on Your 2011 Taxes

While making my way through tax season, I see several items that can be done year round to make your life easier from a tax perspective.  Here are just a few that can save you time and money.

Cost basis

Technology and regulatory reform have made keeping track of what was paid for investments easier, but not perfect yet.  Any time you move investments from one financial institution to another, make sure you ask the institution that you’re leaving for the cost basis on the investments.  It’s much more difficult to go back years later and ask about an account that was closed a long time ago.  That’s especially true if the investments moved into your name from a divorce.  Get the cost basis while the paperwork from the divorce is being processed.

Charity Donations

Each time you take a pile of used stuff to a charity for donation, make a list of the items and attach it to the receipt.  Then total the thrift store value of those items on each receipt.  The IRS wants pretty specific records for donations like these, not just an indication of how many bags or boxes of things you gave.

Refund Expectations

If you’re either getting a big refund or paying big every year, you’re not managing your taxes well.  If you owe a lot each year, you’re probably paying interest and penalties which is a waste of your money.  If you get a big refund each year, the IRS has your money and you need to wait until you file your return to get it back.  The IRS won’t give it to you mid-year just because you ask, nor will they pay you interest when they send your refund.  They shouldn’t have to since they’re not a bank.  A good tax professional can help you estimate what your withholdings and quarterly estimated tax payments should be during the year.  Then your refund or what you owe should be a manageable level.

Consistent preparation

Find a good tax professional and stick with them.  This is efficient on many fronts.  If the preparer isn’t just entering data and doesn’t have too many clients, they will become familiar with your situation and be able to suggest some tax saving strategies as well as have a pretty good idea if you’ve missed reporting some income or claiming some deductions.  Even the preparer’s software helps with that by keeping track of items from one year to the next.



You don’t need to have your life revolve around your annual tax return.  But being just a little proactive can help your tax filing be more accurate and easier to prepare.

About the author

Linda Y. Leitz, CFP®, EA, CDFA

Linda Y. Leitz is a fee-only Certified Financial Planner™ and has been in the financial industry since 1979. She is also enrolled to practice before the Internal Revenue Service. Before becoming a financial professional, Linda held several executive positions in the banking industry. She began her career as a bank examiner. Linda has a BBA in Business Administration from Principia College and an MBA from Southern Methodist University.
As a fee-only financial planner Linda is a member of the National Association of Personal Financial Advisors, the Financial Planning Association, the National Association of Tax Professionals and the Alliance of Cambridge Advisors. As a leader in the financial planning industry, Linda is the author of the book titled "The Ultimate Parenting Map to Money Smart Kids". She has been quoted in several national publications including the Wall Street Journal, U.S. News and World Report, and Morningstar Advisor and she has appeared on CSNBC. She also works as a volunteer instructor to new financial advisors with the Alliance of Cambridge Advisors.

2 Comments

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  • Hi Mary–

    If you are commuting to work, that’s not going to be deductible. If you’re self employed or doing some work where your mileage might be deductible (which commuting isn’t), then there might be some tax breaks.

    Getting out of the $13,000 might not happen through tax breaks. I assume you’re not still adding to your debt, so I’d start by calling the credit card companies to see if they’ll give you a lower rate on your cards. Then pay the most you can on the card with the biggest rate each month and just minimum payments on the lower rate cards. Whenever a card gets paid off, pay the most on the card with the next highest rate and minimums on the rest. You might also go to a bank and see if they’ll do a debt consolidation loan for you. If you can put up your car or your house, a bank would probably be willing to look at it.

    Hang in there! You want to do the right thing, so there will be a way to make it work.

    Linda Leitz

  • I am paying $80./wk on gas to get to work. Can I deduct any of that from my income tax. I owe $13,000. and would like to find ways to make this less. Thanks.

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