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Money Saving Year End Tax Tips
As a financially volatile 2008 winds down, it is important to review your tax
situation with the objective of identifying moves you can make before the end
of the year; with a goal towards minimizing your tax bill.
Tax Planning is a year long process that requires taking actionable steps that
result in payment of the least amount of tax that is legally allowable . Most
people do not take full advantage of opportunities available to them or just
don’t make the time to be informed on how financial decisions effect their
taxes.
The following are highlights of year end 2008 tax planning strategies that our
office is available to discuss with readers to help you obtain your goals.
If you believe that the recession will affect your taxable income next year and
your overall taxable income will be the same or lower as compared to the
current year, take steps now.
STEPS TO SHIFT NET INCOME:
If you have a choice of when to receive payment, defer taxable income until
next year.
Accelerate deductions by prepaying business expenses.
Purchase business equipment and expense the cost currently.
Steps to reduce taxable income:
Maximize the amount you contribute to a retirement plan, traditional (or Roth
IRA*).
Review current investment holdings and reallocate among asset groups with an
overweight in global equities. Buy low when stocks are at or near historic
lows.
Offset gains against losses: Sell enough underperforming stock that will allow
you to deduct $3,000 of capital losses in this year while the remaining realized
losses will carry over to future years.
CONSIDER BUNCHING YOUR DEDUCTIONS:
Make partial payments towards real estate taxes before year end. New law
allows deducting a portion of the expense. Couples can still deduct up to $1000
without itemizing this year.
Make charitable deductions, donate cash or property. Retirees should consider
making donations directly from their IRA accounts to charity.
Finally, sit down with a qualified tax, estate and financial planning professional
for a tax review to identify the best tax cutting strategy for your situation. |
