Saturday, December 05, 2009

Tax time, right around the corner!

Time to get serious about 2009 year-end tax planning!

We're more than 90% done with 2009. What you do with the remaining 10% can have a lot to do with how happy you will be when taxes come due in April. Some items for your game plan:

Look at the scoreboard. You need to see what your taxable income is so far. Make special note of your business income and your capital gains. You can't know where you are going unless you know where you are.

What will happen between now and year end? Will you get a bonus? Will there be a big customer order paid before the end of the year? Do you have a big expense coming due?

What income and expense items can I switch between 2009 and 2010? These are key tax planning tools. Do you have a pending equipment purchase? Can you accelerate a bill collection to move income up if you want to? Can you sit on an invoice to defer collection? Do you have capital losses that you can take between now and the end of the year?

Have you done your gifting for the year? If you are charitably-minded, you might be able to do some year-end gifts to reduce your income. If you've had a bad year in your business, maybe 2010 is a better year to give to charity. If you have enough assets to make estate planning an issue, have you made full use of the $13,000 annual per-donee gift exclusion?

With these tools your tax pro can help you navigate the rest of the year. Decisions you should evaluate include:

- Payment of state and federal estimated taxes before year-end.

- Acceleration of capital asset purchases to reduce taxable income or maximize operating losses.
- Paying cash-basis business expenses before year-end.
- Using capital losses to offset year-to-date capital gains.
- Contribute to the College Savings Iowa Sec. 529 plan, if you are an Iowa taxpayer.
- Year-end charitable contributions of stock or appreciated property.
- Contributions to S corporation capital, or making loans to your S corporation, to ensure that you have basis to deduct corporate losses.

It's time to get moving!

We'll be covering these and other year-end planning moves between now and year-end at the web version of the Tax Update at

Thanks to Joe Kristan at Roth CPA's for this posting!