As the year winds down, the time available to position yourself to be tax efficient becomes short. And given the uncertainty of tax laws in 2010 and the certainty of tax changes in 2011, tax planning is more important (and more difficult) than ever. Here is a list of things to consider:

Review investments and decide whether to liquidate any holdings. This is important if you believe that, as laws are currently written, capital gain taxes will go up in 2011.

Estimate your tax liability and determine if estimated payments are required. Make sure you account for the 2010 expiration of the Making Work Pay Credit.

Conduct a final tax planning review to reduce this year's taxes. Remember, tax rates will go up in 2011 if no Congressional action is taken.

Make any final year-end cash and non-cash contributions.

Make any final retirement plan contributions OR distributions.

Think about making any final gifts to meet your annual gift giving limits.

Begin initial review to organize your tax records.

Consider rollovers into Roth IRAs.

More changes to come?

With so many tax provisions expiring in 2009 and 2010, it makes planning your tax obligation difficult. What should you do? Outlined here are some of the key changes impacting 2010, including some suggestions to remain flexible if and when the law changes:

Deduction and Exemption Phase-out Eliminated. For 2010, your personal exemptions and deductions will not be subject to phase-out based on your income. The phase-outs are re-established in 2011.

Alternative Minimum Tax. The exemption levels drop back down in 2010 unless Congress acts to sustain higher exemption levels. For the past few years Congress has done just that, saving numerous taxpayers from this higher tax.

Domestic Production Activities Deduction. This deduction increases from 6% to 9% of qualifying business net income in 2010.

State and Local Sales Tax Deduction. Save any receipts that substantiate payment of large amounts of sales tax. If continued, you may opt to deduct either state income taxes OR the state and local general sales taxes paid as an itemized deduction.

Teachers Classroom Expense. If you are a teacher, assume you will be able to continue to deduct up to $250 of qualified out-of-pocket expenses for unreimbursed purchases of qualifying classroom supplies and materials.

Standard Deduction for Property Taxes. The option of using a standard deduction for $500 to $1,000 of real property taxes expires in 2009 unless extended.

Other Provisions Worth Watching. Other common tax code provisions that could be extended through 2010 include; direct contributions to charities from qualified retirement plans, waiver of minimum distributions from retirement accounts if over 70 years old, and the extension of the qualified tuition and educational expense deduction. In all these cases, once again, save any documentation required to take advantage of these options to retain flexibility if and when the tax law changes.

In late September, 2010 the Small Business Bill was signed into law. The bill includes an estimated $12 billion in tax incentives for small businesses. Chief among them are:

Section 179 Expensing. For qualified capital purchases in 2010 and 2011, businesses may expense (versus depreciate) up to $500,000 in new purchases. In addition, qualified leasehold investment property, restaurant property, and retail improvements may now be expensed up to $250,000. The expense option phases out when total qualified purchases exceed $2 million.

Bonus Depreciation. The bill extends the special 50% first-year bonus depreciation for new (not used) qualified property placed in service in 2010.

Cell Phone Bookkeeping. You no longer need to keep a log of business use of cell phones. The bill de-lists cell phones as "listed property" requiring less substantiation to qualify cell phone expense as a reasonable business deduction.

The bill also includes many provisions to help stimulate lending money to small businesses. If you are looking to expand your business it pays to review the new lending possibilities with your lender. Should you have any questions regarding your situation, please call.