End of Year Tax Tips to Save Big in 2010

Dec. 17, 2010 — -- Congress may have passed a new tax bill, but they're not the only ones preparing for tax season. There is still time to make changes right now that will save you a bundle on your 2010 taxes.

Mellody Hobson, president of Ariel Investments, appeared on "Good Morning America" to answer questions and share tips about what people can do by year's end to lower their tax bills.

Q: One of the big tax incentives that is expiring this year has to do with making your home green. How can people take advantage of this tax credit before it's gone?

A: The government introduced a tax credit for energy efficiency last year, but it will expire Dec. 31. If you are thinking of making an energy improvement soon, you must have it installed in your home by Dec. 31, Hobson said.

Click HERE for Mellody's web-extra tips.

If you do, you save money on your monthly utility bill and you'll get a tax credit equal to 30 percent of the cost, up to a maximum of $1,500, she added.

If you have used a partial credit, you can still use the remaining amount right up until the deadline. Qualifying jobs include the installation of insulation, energy efficient windows and doors, water heaters and roofs, among other things, she said.Only existing homes that are the applicant's principal residence quality for the credit. New homes and rentals do not, she said.

Click HERE for more information on how to claim the credit.

Q: Health care reform has been a hot topic this year. Is there anything in the bill that will affect my taxes?

A: Many Americans have flexible spending accounts (FSAs) through their employers. FSAs are accounts that allow you to set aside pre-taxed money to use on out-of-pocket health-related costs such as drugs, co-payments and other medical expenses. The downside is that you will lose any money you set aside and fail to spend.