• File tax returns timely to avoid giving the IRS your refund!
• Consider an entity to minimize self-employment taxes.
• Keep tax exempt income to a level that does not increase the taxable portion of your Social Security payments.
• Maximize your medical deductions via a:
• Flexible Spending Account (FSA) - withheld pre-tax from wages; reimbursed as expenses are incurred
• Health Reimbursement Account (HRA) – allows pre-tax reimbursement to a spouse of medical expenses to be incurred that year
• Health Savings Account (HSA) - deductible contributions (no longer limited to health plan deductible) to accounts to be used for current or future medical expenses
• Pair an HSA with a limited purpose HRA or FSA; for example, the HRA or FSA may reimburse dental, vision or preventive care or may reimburse after the health plan deductible is met.
• A full year’s contribution may be allowed for an HSA set up during 2008.
• Deduct medical mileage incurred.
• Deduct long-term care insurance premiums.

• Consider employing your minor child and avoid payroll taxes on the wages.
• Consider leasing property to an owner to obtain funds without generating self-employment taxes.
• Claim dependants to which you are entitled, including certain relatives not living with you or descendants living with you but earning significant income.
• If your exemption for a dependant is phased out due to income levels:
• Consider forfeiting the exemption for a student in college to allow the child to obtain education tax credits and possibly the dependency exemption (assuming the child has taxable income).
• A child with earned income may qualify to take a sibling as his/her dependant and may qualify for the earned income credit.

• If you believe that tax rates will be increasing or that you will be in a higher income tax bracket when you retire, consider a Roth IRA:
• Contributions are not deductible, but qualified distributions are tax free.
• You can access original contributions at any time, tax and penalty free.
• High income individuals may convert to a Roth IRA in 2010.
• Maximize your conversion by contributing to a non-deductible IRA now.
• Rollovers from another retirement plan may be allowed.

Call me today to maximize your tax savings; I will review your prior year return at no charge for potential suggestions.

Rondalyn Baker, CPA
www.mrbcpas.com
281-558-9800