Few days remain to reduce 2011 tax liability [The Herald, Rock Hill, S.C.]

Dec. 28--The Internal Revenue Service estimates about 2,007,600 South Carolinians will file individual tax returns for 2011. About 1.6 million returns will be filed electronically.

While the deadline to file is April 17, taxpayers can take advantage of five tax tips in the final days of 2011 to reduce their tax liability.

"You can definitely make a difference" in the next few days, said Brian Ullrich, certified public accountant with the Rock Hill firm Burkett, Burkett & Burkett.

Give to charity

Taxpayers who itemize deductions will need to make donations by Sunday to qualified charities. Go to www.IRS.gov and check "Search for Charities" to see if a charity qualifies. Records, such as a cancelled check, bank or credit card statement, or receipt from the charity, are needed.

Local Goodwill stores are prepared for last-minute donations. Goodwill advised that if donors are unsure of whether an item qualifies for a tax deduction, they should consider whether they would give the item to a relative or friend. If the answer is yes, then it is appropriate to donate. To determine the value of donated items, go to www.goodwillsp.org/donate.

Contributions to most religious organizations can be deducted if you itemize.

Save for retirement

Elective deferrals you make to your employee-sponsored 401(k) plans or similar workplace retirement programs must be made by Dec. 31. The maximum employees can contribute to a 401(k) is $16,500. Employees have until April 17 to set up and contribute to a new IRA or add money to an existing IRA. IRA contribution limits are $5,000, and up to $6,000 for people age 50 or older.

Prepay bills

Paying your January mortgage, fourth-quarter state tax estimate or winter semester college tuition allows taxpayers to claim them on their 2011 return.

Going green

Installation of certain energy-saving windows, insulation and hot water heaters can qualify for up to a $500 credit. These credits are set to expire at the end of the year.

Credits set to expire

Expiring credits include the mortgage premium insurance deduction and above-the-line deductions for higher education tuition and out-of-pocket classroom expenses. Teachers and aides from kindergarten through high school can deduct $250 for classroom expenses.

Also expiring are the option to deduct state and local sales and use taxes instead of state and local income taxes and tax-free distributions by those age 70 1/2 or older from IRAs for charitable purposes.

Consumers may want to make big-ticket purchases in the final days of 2011 in order to assure a deduction for sales taxes on the purchases if you plan to claim a state and local general sales tax deduction instead of a state and local income tax deduction.

For businesses, tax breaks set to expire include 100 percent bonus first-year depreciation for most new machinery, equipment and software, and the research tax credit.

Don Worthington 803-320-4066

The IRS, National Society of Accountants, Jackson Hewitt Tax Service, Burkett, Burkett & Burkett, Goodwill Industries of the Piedmont contributed.

Copyright 2011 The Herald. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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