YEAR END TAX PLANNING

If you wait until after the year ends, there is very little if anything that can be done other than finding expenses that you forgot or never knew were deductible.

Now is the time to see if there are ways to minimize your personal income tax or business taxes for businesses with a calendar year end.  Sometimes minimizing income is not the answer.  If you have losses that cause you not to use all your itemized deductions and you have the ability to accelerate income increasing your income may be the correct answer.

Since medical expense is limited to a percentage of income earned, it may be a benefit to bunch up your medical expenses from the current to next or from next year back to the current.

If you will be buying glasses or contact lenses soon, it might make sense to buy them this year if your income is expected to be lower than next year’s income and you have a large amount of medical expenses this year or postpone the acquisition until next year if next year is when your income may be lower and medical expenses higher.

Also, if you have a windfall of income this year you may want to accelerate your charitable contributions for next year this year.

Certain itemized deductions are disallowed for alternative minimum tax (AMT) purposes.  Itemized deductions that are not deductible to reduce the AMT are taxes: state income or sales tax, real estate, personal property, auto excise and other miscellaneous taxes.  In addition to taxes most other deductions including unreimbursed business expenses, dues, tax preparation costs, investment fees, legal fees, etc.

Over the last several years more and more people have become subject to the alternative minimum tax.

Tax planning is as much an art as it is a science.

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