Tax time is coming!
I’ve worked with the same large, well-known CPA firm in Denver for probably a dozen years and every year, I’ve asked what, if anything, I can do reduce my tax exposure. The response was always standard – increase your expenses, buy a home (which I did when I didn’t own one), but that was about it. But this year, I’m working with Alicia Green (www.abcpa.us), whom I’ve know for years. She’s successfully dealt with many different issues, specifically with Quickbooks. She is a true expert and even teaches Quickbooks classes.
This year, she sent out the “year-end tax savings ideas” email below to her clients, which I found to not only be thoughtful, but actually useful, so I wanted to share it with you! Alicia says (reprinted with her permission, of course)….
In anticipation of year-end 2008 I thought I’d send out an email with some tax planning thoughts and ideas that you might consider as this year rapidly comes to a close.
Traditionally, tax planning ideas have emphasized deferring income into the next taxable year and accelerating deductions into the current year. However, the economy and a new administration may require some re-thinking about these positions. For instance, in this economy, would it be a risky move to defer a bonus into next year? It might be better to take the bonus this year, cash in hand, and pay the taxes.
In addition, as I’m sure you are aware, there were several tax proposals put forth by the incoming administration during the campaign. These included tax cuts for those earning less than $250,000 a year (filing jointly) and a tax increase for those earning above that amount. In addition, an increase in the capital gains rate from the current 15% to the previous rate of 20% was also proposed.
Again, given the current economic environment, whether these tax policies will be enacted is open to the debate. If I were a betting person, I would bet that the capital gains rate (and the lower rate for dividends) is increased in 2009. Therefore, if you are in a position to close on a deal that would generate capital gains income, you might want to think about having that deal close in 2008.
I would also tend to think that, as part of an economic stimulus program, we may see some tax cuts in 2009. (At the same time, with the economy in the position it is, we may not see any tax increases until 2010, but all of the above is, of course, speculation).
In either case, if you would like to discuss your current tax situation, and how any potential tax changes might impact you, please feel free to give my office a call. In addition, there were legislative changes in 2008 that may impact you. These include:
1. Increased tax depreciation for assets acquired in 2008 (including an additional $8,000 write-off for vehicles purchased in 2008).
2. the extension of residential energy credits. However, these credits will not apply in 2008, but in 2009 (thus, if you are considering energy-efficient upgrades to your home, you may wish to consider deferring these until 2009)
3. an above-the-line write-off for real estate taxes on property you own if you do not itemize.
Bottom line? If you’re thinking about making any significant changes in your tax status before year-end, or would just like to review your current situation in anticipation of filing your returns next year, I’d be happy to assist you in your planning.
Sincerely,
Alicia Green, CPA
720-941-0335
As Alicia has mentioned above, some of her thoughts on the future are speculative, but I plan on taking advantage of the $8,000 write-off for a new vehicle! I’ve wanted to buy a new car for some time, so this write-off, along with the economic environment, seals the deal on purchasing. (Now, if I can just decide which one!)
Good luck to you in all your business endeavors.
Wishing you many tax savings,
Nina Nichols
President
Resolution Research