Year End Planning

We can help you create and implement the best tax-savings strategy for your specific situation. Yet there are many basic ideas you can employ on your own to reduce your tax burden. Here's a brief look into some strategies you can use.

1. Maximize 401(k) or tax deferred plan contributions - most plans allow employees to contribute pre-tax dollars to a plan up to the maximum allowed by law.
2. Shift income - when you are in a high tax bracket consider shifting income to family members who are in lower tax brackets. Gifting up to $10,000 each year to your children. The investment income up to $1,300 will be taxed at a marginal rate.
3. Accelerate or defer income - the timing of both income and deductions can provide opportunities for tax savings from one year to the next.
4. Bunch expenses - many itemized deductions are subject to limitations or phase-outs which reduce their benefit. You may be able to bunch several deductions into one year.
5. Adjust your withholding - make sure your withholding is neither too low nor too high to maximize use of funds and minimize potential penalties.
6. Maximize interest deductions - convert nondeductible interest, such as credit cards, into deductible interest by using a home equity loan.
7. Get receipts for charitable contributions - you must have written substantiation for donations over $250.
8. Donate appreciated assets to charity - by donating appreciated assets you have held more than 18 months, you may obtain a deduction equal to the fair market value and avoid paying tax on the capital gain.
9. Claim excess Social Security taxes withheld - if you change jobs during the year and had two employers each withholding Social Security tax, you may have paid in more than you are required.
10. Consider installment sales to defer capital gains - if you sell certain business or investment assets, selling them in installments to defer capital gains.
11. Offset capital losses with capital gains - capital losses can only be deducted against capital gains, with up to $3,000 per year allowed to offset other income. If you have loss carry forwards consider selling enough investments with gains to use up the loss.
12. Use a like-kind exchange to defer gain on business or investment property - exchanging business or investment property may defer gain by reducing the basis of the newly acquired property.
13. Writing off equipment - you can deduct the first $18,000 of equipment purchased during the year, rather than having to depreciate them over a five to seven-year period.

Be sure to consult with a tax advisor for proper planning and implementation of tax savings ideas to be sure they are right for you.

C. David Pitzer, CPA, PC
118 Two Mile Pike
Goodlettsville, TN 37072
(615) 851-2727
Fax: (615) 851-8711

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