Year End Reminders

When the holiday season passes and the New Year begins, it is time to begin thinking about getting your taxes done. However, before the ball drops in Time Square, it is important to remember that this is the best time to think about some crucial end of the year planning that can prove beneficial in the preparation of your taxes. With just a little planning and record keeping, you might be able to reduce or eliminate your tax liability. Below are a few suggestions to assist with your planning:

  • Make a contribution to your IRA – generally, the annual deductible limit for a Traditional IRA for 2008 and thereafter  is $5,000.
  • Are you self-employed? Delay your year end billing to clients so that payments will not be received until 2010.
  • Consider buying short term bonds or certificates that will not mature until the following year to defer interest income. If you control when dividends are paid, defer those payments until after year end.
  • Clean out your closets and donate those items to Goodwill, The Salvation Army or any other charitable organization. To assist with your recordkeeping, we have an example of a charitable contribution register in our office - if you would like a copy please contact us.
  • Make your final church related contributions in cash for the year. Donate to other charitable organizations such as college scholarship funds.
  • Pay your state income taxes, property taxes and any other cash expenditures before year end.
  • Review your investment positions and consider liquidating holdings to offset gains for the current year or capital losses you have remaining for prior years.
  • If you are a business owner or have substantial business expenses, think about prepaying January rent, utilities or a key supplier you expect to owe next year. Make sure the check is mailed and not in your custody or control by December 31 or earlier.
  • For business owners who purchase equipment at year end, make a “Section 179 Election”, which allows you to expense (i.e., currently deduct) otherwise depreciable business property. Beginning in 2008, the maximum section 179 expense deduction was generally increased from $125,000 to $250,000. The assets must be placed in service in 2008 to receive the deduction.
  • Make sure you have an accurate mileage log. For 2008, the standard mileage rate for the cost of operating your car, van, or panel truck for business miles is 50.5 cents per mile for the period January 1 through June 20, and 58.5 cents per mile for the period July 1 through December 31. We have an example of one in our office - if you would like a copy please contact us.

If you have special situations or specific questions, please do not hesitate to call our office. As always, we look forward to working with you in 2009 and are so grateful for your business.

 

IRS CIRCULAR 230 REQUIRED NOTICE
IRS Regulations require that we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended to be used and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code or for the purpose of promoting, marketing or recommending to another party any transaction or tax-related matter.