Tax Strategies in a Tough Economy
For most of us, income tax calculations don’t change much from year to year. But thanks to the roller coaster economy of the past few years, many people have undergone major life changes that can have a significant impact – good or bad – on their taxable income and how they should file taxes.
Even though April 17 (this year’s tax-filing deadline) is a ways off, it’s never too soon to start planning your strategy, particularly if you experienced financial hardships in 2011 that could affect your taxes. The IRS has a handy guide called The What Ifs of an Economic Downturn (search www.irs.gov) that reviews the tax impacts of different scenarios such as job loss, debt forgiveness or tapping a retirement fund.
Here’s a roundup of common economic challenges you may be facing and their possible tax implications: