Now is the time of the year that nearly every tax professional writes an article pointing out the need for tax planning and offering their "last minute tax tips." I firmly believe tax planning is a year-round process, not something done only at year-end. Keeping in mind the philosophy I learned many years ago from Archie comics, that "cramming the night before a big exam is not a great idea, but it beats the heck out of cramming the night after," I'll join the chorus about last minute planning. No two people are alike; thus, tax plans do not come in "one size fits all" types. I will present some ideas, and information, that may help you. Keep in mind, though, that what I write is general by its nature; it is not tax or legal advice and it is not intended to tell you how to prepare your own return.
The general idea is to pay as little tax as legally possible, and to wait as long as legally possible before paying that. Usually this means to delay recognizing income and to accelerate recognition of deductions. Sometimes the best idea is to do the opposite, such as when tax rates are going up the following year, or the Alternative Minimum Tax may be a consideration, or maybe your ship is coming in and will put you in a higher bracket. Taxes can also be reduced by making an otherwise nondeductible expense deductible, such as using home equity loans where interest is fully deductible to pay off charge card debts where the interest is non-deductible. Ideas to consider:
In future issues, I will discuss some tax saving ideas for businesses, what to do if you receive an incorrect 1099, things you should know before signing a joint return, what deductions you can take even if you can't rent out your property, the latest rulings on deducting tax preparation fees for the self-employed, tax draw-backs for guaranteeing a child's loan, and determining when a tax return is considered filed.
Gary J Wood, P C, CPA has been solving tax and accounting problems for individuals and owners of closely-held businesses in the Valley area for more than a decade. Information contained in this article is general by its nature and should not be construed to be tax or legal advice.
If you would like specific advice for your situation,
please call (602) 956-1774 and arrange an appointment.
A copy of his newsletter, Schedule FYI, is available on the Internet at or by sending a SASE to
P O Box 32815, Phoenix, AZ 85064.
|Return to Publication Index||Return to Home Page|