The Internal Revenue Service reminds Washington taxpayers that there is still time to take action to lower their 2011 federal taxes if they take action by Dec. 31.
Here are the federal agency’s suggestions:
• Charitable contributions: Donations must be made to qualified charities no later than Dec. 31. Donations charged to a credit card by Dec. 31 are deductible for 2011 even if the bill isn’t paid until 2012.
• Energy-efficient home improvements: Installing energy efficient improvements such as insulation, new windows and water heaters can reduce taxes by up to $500. The Residential Energy Efficient Property Credit, designed to spur investment in alternative energy equipment, also offers tax benefits. More information: Special Edition Tax Tip 2011-08 at http://1.usa.gov/rRPmXs.
• Retirement account contributions: Elective deferrals to employer-sponsored 401(k) plans or similar workplace retirement programs must be made by Dec. 31. However, taxpayers have until April 17, 2012, to set up a new IRA or add money to an existing IRA for a 2011 tax savings.