For 2011 we are about to see (or, likely about to see) significant changes in the tax code. Some of the changes are previous rules due to expire at the end of 2010. Others are specific changes at targeted items. The following is a list of scheduled changes:

1. Unlimited income Roth IRA conversions with 2-year tax liability spread if completed prior to December 31, 2010
    
2. Final year of reduced Capital Gain tax preference
    
3. Final year of investment Dividend tax preference
    
4. The 28%, 33% and 35% Tax Brackets are expected to increase January 1, 2011
    
5. Home Energy Tax Credit expires December 31, 2010
    
6. The American Opportunity Credit (college tuition) expires December 31, 2010
    
7. Changes to the Coverdell Education Savings Account begin on January 1, 2011
   
   
8. Changes to the 529 college-savings account begin on January 1, 2011

• Estate Tax returns on January 1, 2011
• Making Work Pay Tax Credit ends on December 31, 2010
• Child Tax Credit will be reduced on January 1, 2011
• Earned Income Tax Credit to be reduced (with exceptions) January 1, 2011
• Hope Tax Credit to be reduced January 1, 2011
• Personal Exemption and deduction preferences end December 31, 2010
• The AMT gets a "patch" for 2010, but will it be fixed in 2011?

That's a long list. Many items don't apply to everyone, but better to know now than be surprised later.

The bulleted items in italics at the bottom of the list shown to the left are more informational only. There may not be particular actions that can be taken to address these coming changes. However, the numbered items at the top of that list may present planning opportunities. An ordered list of possible actions is shown below.

1. If you are thinking of doing a Roth IRA conversion, run the numbers and make your decision in 2010. This will allow the option of spreading the tax liability over two years.
    
2. If you expect to sell capital appreciated items in the near future, consider selling in 2010 to avoid the possible higher capital gains tax rate.
    
3. Review Dividend producing investments in taxable accounts and modify as needed.
    
4. Report flexible income in 2010 rather than waiting for 2011 to avoid higher tax rates.
    
5. Complete energy-saving home modifications in 2010 to capture the tax credit.
    
6. Make college tuition payments in 2010 to take advantage of the credit.
    
7. After 2010 the Coverdell Education Savings account cannot be used for elementary or high school tuition. Pay in advance if possible.
    
8. The last year to claim computer, software or Internet expenses against a 529 college savings account is 2010.

While it may not be prudent to do something solely for tax-saving purpose, the idea here is to consider if executing an expected action sooner rather than later might be advantageous. Unlike most years where postponing income is desirable, this year may prove different.