Year-end tax planning

Now is the best time of year to do tax planning, because we can now combine general tax planning with year-end tax planning. Here are some money-saving ideas you may want to put in action before the end of 1999:

. . . Postpone income until 2000 and accelerate deductions into 1999 to lower your 1999 tax bill. Postponing tax generally is one of the main goals of year-end tax planning. It's particularly relevant if you plan to claim deductions, credits, and other tax breaks that are phased out over varying levels of adjusted gross income (AGI). These include Roth IRA contributions, conversions of regular IRAs to Roth IRAs, child credits, and deductions for education loan interest.

. . . Make gifts to family members to take advantage of the $10,000 gift tax exclusion that apples for each donee each year. (You get no carryover of any unused exclusion it's a 'use it or lose it' benefit.)

. . . Bunch expenses into one year to maximize your itemized deductions.

. . . Time capital losses and capital gains to make the best use of the special rules for these items.

There are many non-tax factors that could influence your year-end planning. These factors include a significant raise or bonus, a change in jobs, changes in the amount of your business expenses or itemized deductions, adoption or birth of a child, a death in the family, or a change in your marital status.

By doing year-end tax planning now, we can take maximum advantage of new tax rules, as well as the differences in your own particular situation in the two years.


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