Friday, December 01, 2006

Tax Planning

Upon opening my mail today and seeing the December real estate tax bill, I started thinking about year-end tax planning. For starters I need to catch up with loading my year-to-date check register from my bank so I can see my income and expenses for the year. I'll go over this and meet with my accountant to make some year-end decisions.

If you find yourself with more income this year than anticipated, and a significant tax liability, you should consider prepaying some items this year. For example,
- if you have a December tax bill, as I do, that is not due until February '07, you could pay it prior to the end of 2006 to get that deduction for this year.
- if you make state estimated tax payments, consider paying the fourth quarter installment in December '06 instead of waiting until the due date of 1/15/07.
- make your January mortgage payments on all real estate holdings in December '06 instead of waiting until January '07.
- if you have a business and need any new equipment, the current year write-off for these purchases is $108,000.
- clean out your closets now and donate unwanted household items and clothing. The I.R.S. allows donations only for items in good condition. You may wish to photograph your donations for proof of condition and then also be sure to get a receipt for these donations. Be sure to check this year's limit on charitable givng.
- if you have a post-secondary student in school, there is the Hope Credit and the Lifetime Learning Credit that applies to some taxpayers.

Following are some useful websites to provide you with additional info:

--- - get up-to-date forms and information
--- - find out where to donate unwanted belongings
--- - download Turbo Tax software
--- - download Money software