Saturday, September
4 2010
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Saturday, September
4 2010
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Announcing a new acquisition!!
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What's New at Forte for the year 2007 December 2007A - Say Goodbye to 2007 with Some Smart Tax Moves By Forte News Department December’s a busy month, but it’s not too late to
focus on last-minute tax savings. Consult a tax or financial advisor such as a
Certified Financial Planner™ professional to see if these might work for you: Do an AMT sweep: One of the reasons why it’s wise to
consult a tax adviser before you start accelerating deductions is that certain
people over $75,000 find themselves more susceptible to the alternative minimum
tax if they proceed. The AMT is an alternative taxation process that’s figured
separately from your regular tax liability and you have to pay whichever tax is
higher. State and local income taxes and property taxes, for example, are not
deductible when figuring the AMT. Under the regular rules, medical expenses
that exceed 7.5 percent of adjusted gross income can be deducted under the
regular rules, but under the AMT, that threshold is 10 percent. Also, under
regular rules, interest on up to $100,000 of home-equity loan debt is
deductible no matter how the money is used, but under the AMT, the deduction
holds only if the money was used to buy or improve a primary or second home. It
pays to check your AMT risk before you execute any end-of-the-year tax-savings
strategy. Check investment gains and losses: If you have some capital losses in your taxable
investment accounts, see if it makes sense to sell and offset them against any
capital gains you've realized this year. Such losses can offset 100 percent of
capital gains plus up to another $3,000 in ordinary income. Any losses in
excess of that number can be carried forward to the next tax year. Prepay property taxes: If it makes sense to accelerate that deduction, pay those
early 2008 taxes before the end of the month. Prepay state taxes: Again, if it makes sense based on your tax situation, consider making a
fourth-quarter estimated state tax payment due in January this month to
accelerate the deduction. Defer income if possible: Self-employed people and some business owners might elect to
invoice customers in January so they don’t have to include that income on their
2007 return. Keep in mind that it only makes sense to defer income if you think
you will be in the same or lower tax bracket next year. Got time to go green? December isn’t exactly everyone’s favorite month for home
renovations, but if you are inclined to replace windows, insulation or
heating/air conditioning systems that meet particular energy conservation
standards, you might qualify for a credit up to $500. Consider the sales tax/income tax tradeoff: Taxpayers in 2007 will again have
the option of claiming either state income tax paid or state sales taxes paid
as itemized Schedule A deductions. If your state doesn’t have an income tax,
definitely start totaling all the sales taxes you’ve paid. However, if you do
pay a state income tax but have purchased such big-ticket items as cars, boats
or construction supplies and equipment during the year, run the numbers anyway.
The total sales tax deduction is figured on an amount from the IRS state sales
tax tables in addition to the actual sales tax amounts paid on the major
purchase items. The alternative is to
ignore the IRS Tables, and simply add up all sales tax payments. Plan a stock donation
to charity: If you
have stock with a large unrealized capital gain that you’ve held longer than a
year, you can give that stock to a qualified charity and claim a deduction for
the current fair market value of the security. If you have a stock with an
unrealized capital loss, do the opposite – sell the stock, claim the capital
loss, then donate the resulting cash proceeds to charity. This is actually
better than just donating cash, because you get the same deduction and never
have to pay the capital gains taxes from the appreciated security. Make sure donations are documented: As of January 1 this year, you now
must have a either a receipt or a canceled check to back up any contribution,
regardless of the amount. If you don't have such a written record, the IRS will
reject the write-off if the lack of proper record keeping is discovered in an
audit. December 2007 — This column is
produced by the Financial Planning Association, the membership organization for
the financial planning community, and is provided by David W. Henion, a local
member of FPA. | ||||||||||||||
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