Tax Moves to Save You Money in Gwinnett

It is hard to believe we’re in the final quarter of 2008. With the end of the year rapidly approaching it is imperative that individual and businesses take actions to reduce their tax liability. Most of the tax benefits that apply to taxpayers must be acted on prior to year-end.

We counsel our clients throughout the year on what they need to be doing to reduce their tax liabilities. During 2008, a lot of clients think that since this year has been down financially that tax planning is not important. Tax planning is actually more important in a poor economy. Make sure you are taking advantage of all the tax breaks afforded to you by the federal and state governments.

Some of our favorite tax planning tips for 2008 include:

• Accelerating Deductions – if you normally give to a charitable organization in January or later in the year, consider donating to this organization prior to year-end. If you have to pay state taxes consider making these payments before year-end. Most taxpayers will get a deduction for these payments now instead of waiting another year.
• Delay Income – if you are expecting a bonus prior to year-end, see if your employer is willing to wait until January to make this payment to you. If you have appreciated capital assets that you intend to sell, consider waiting until January to delay the income.
• Purchase Equipment and other assets – this applies mainly to business owners who need equipment to operate. The tax code allows for the deduction of most furniture and equipment purchases made during 2008 with certain limitations. Often when speaking with our business clients, they tell us of asset purchases they intend to make next year. We often analyze the tax savings of making this asset purchase this year and find they receive a substantial tax savings for acting now rather than waiting.
• Maximize your retirement plan deductions – whether you are an employee or self-employed this is an easy way to fund your retirement and receive a current income tax reduction for doing so. Often employers will match certain contributions you make to your retirement plans which gives you another reason to take advantage of this opportunity.
• Consider selling appreciated capital assets – if you have capital loss carry-forwards from prior years or this year, you may consider selling appreciated assets to offset the losses. The tax code allows for a $3,000 capital loss each year but allows gains to offset other losses.
• Bunch your deductions with limitations – these deductions include medical expenses and miscellaneous itemized deductions such as unreimbursed employee business expenses. By bunching your expenses in one year you may be able to overcome the deduction limitations (7.5% for Medical Deductions and 2% for Miscellaneous Itemized Deductions).
• Ensure you have paid enough in taxes – it is bad enough to owe tax on April 15th. To make matters even worse, you could face penalties and interest if you do not pay in enough in taxes throughout the year to cover this shortfall.

The tax code is ever-changing. We anticipate more changes before 2008 comes to an end. Make sure you stay on top of these changes to minimize your tax liabilities.

We would enjoy the opportunity to show you how we can help you with tax savings. Please contact one of our CPAs, Ben Robinson or Kevin Smith by calling 678-541-0368 or info@northatlantacpa.com.