YEAR-END TAX PLANNING
Year-end Tax Planning Strategies:
As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill for this year. Although there are factors that make this process challenging, the basic strategy looks at postponing income and accelerating deductions.
We suggest you start by looking at your 401K, IRA, SEP and other income deferral plans as well as prepaying state income taxes owed and “bunching” miscellaneous itemized deductions in certain years. As part of the planning process, we also consider the effect of certain deductions for AMT and we look at ways to minimize the Net Investment Income Tax of 3.8%.
We suggest that business owners consider: purchasing certain types of machinery and equipment before year-end; taking advantage of the “de minimis safe harbor election” to expense the cost of inexpensive assets; and look at the timing of billings and payment of expenses.
Lastly, we encourage you to review your Revocable Living Trust Agreements and Wills to be certain they maximize estate planning strategies given the changes made in recent years to estate taxation and we encourage you to consider taking advantage of the $14,000 per person annual gift exclusion. Certain transfers may also save family income taxes where income-earning property is given to family members in lower income tax brackets who are not subject to the kiddie tax.
These are just some of the year-end strategies that can be taken to save taxes. By contacting us, we can tailor a particular plan that will work best for you. We also suggest staying in touch in the event that Congress revives expired tax breaks to assure that you don’t miss out on any resuscitated tax-saving opportunities.