| While the average taxpayer will avoid
| |
| | miscellaneous deductions.If you expect to
|
| thinking about income taxes until the
| |
| | be able to itemize, and you are making
|
| approach of the April deadline forces him
| |
| | quarterly state estimated tax payments,
|
| to do so, once the ball drops on One
| |
| | make the 4th quarter payment in December,
|
| Times Square at midnight on December 31st
| |
| | instead of waiting until the January 16,
|
| and the New Year is rung in there is very
| |
| | 2006 due date, so you will be able to
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| little that can be done to cut your tax
| |
| | deduct the payment on your 2005 Schedule
|
| bill.However, during the last two months
| |
| | A.4) If you do not have the cash
|
| of the year you can do a great deal to
| |
| | available to pay for the deductible items
|
| reduce your tax liability.Sit down with
| |
| | you have scheduled as part of your
|
| paper and pencil and list your
| |
| | year-end plan, you can use a credit card
|
| anticipated income for 2005 and all your
| |
| | to pay for the item and still get a 2005
|
| allowable deductions to date. What you
| |
| | deduction. Allowable expenses charged to
|
| want to do is, using your 2004 return as
| |
| | a credit card (VISA, Master Card,
|
| a guide, prepare a projected 2005 return.
| |
| | American Express, Discover) are
|
| Once this is done you can decide what
| |
| | deductible in the year charged, and not
|
| steps to take to make sure you pay the
| |
| | in the year that you actually pay for the
|
| absolute least amount of federal and
| |
| | charge.5) The option to deduct state and
|
| state income tax possible for 2005 and
| |
| | local sales tax paid instead of state and
|
| 2006. Tax information for 2005 (i.e.
| |
| | local income tax paid will expire on
|
| standard deduction and personal exemption
| |
| | December 31, 2005. This option will not
|
| amounts, tax rates, etc.) is available on
| |
| | be available for 2006. If you are
|
| the WHAT'S NEW FOR 2005 Page at are some
| |
| | planning to buy a new car (other than a
|
| year-end tips:1) Traditional year-end
| |
| | qualifying energy-saving hybrid - see tip
|
| planning calls for postponing the receipt
| |
| | #6), SUV, motorcycle, or other "big
|
| of taxable income until 2006 and
| |
| | ticket" item in the near future you may
|
| accelerating allowable deductions to be
| |
| | want to do so before the end of the year
|
| claimed in 2005, the idea being to reduce
| |
| | to be able to deduct the sales tax.6) The
|
| your 2005 taxable income to a minimum.
| |
| | Energy Tax Incentives Act of 2005 creates
|
| This strategy will generally apply if you
| |
| | new tax credits for certain energy-saving
|
| expect to be in the same tax bracket for
| |
| | autos, consumer products and home
|
| both 2005 and 2006, or if you will be in
| |
| | improvements beginning in 2006. You may
|
| a lower bracket in 2006.If, however, you
| |
| | want to postpone any purchase of
|
| anticipate a substantial increase in
| |
| | qualifying energy-saving items until next
|
| taxable income in 2006, which will push
| |
| | year to be able to claim the credit.7)
|
| you into a higher bracket, you should do
| |
| | While postponing income and accelerating
|
| the reverse and accelerate the receipt of
| |
| | deductions may reduce your "regular"
|
| taxable income to 2005 and postpone
| |
| | income tax for 2005, these actions may
|
| deductible expenses until 2006. Income
| |
| | backfire and end up costing you if you
|
| received in 2005 will be taxed at a lower
| |
| | fall victim to the dreaded Alternative
|
| rate, and deductions claimed in 2006 will
| |
| | Minimum Tax (AMT). Why? Because taxes
|
| yield a greater tax savings.Not sure what
| |
| | and miscellaneous expenses are not
|
| your 2006 income will be. Follow the
| |
| | deductible in calculating AMT, and
|
| rule of "when in doubt - defer" - go the
| |
| | medical expenses are only deductible to
|
| traditional route and postpone income and
| |
| | the extent they exceed 10% of AGI. When
|
| accelerate expenses.2) It does not pay to
| |
| | preparing your projected 2005 return be
|
| itemize unless the total of your
| |
| | sure to determine if you will be subject
|
| allowable deductions exceeds the standard
| |
| | to AMT and plan your strategies
|
| deduction that applies to your filing
| |
| | accordingly.8) When preparing your
|
| status, plus any additions for age or
| |
| | projected return you should review the
|
| blindness. If you decide to accelerate
| |
| | performance of your investment portfolio
|
| allowable deductions to claim them in
| |
| | for the year. Add up all your realized
|
| 2005, you can accelerate all you want,
| |
| | gains and losses from actual sales of
|
| but it will be wasted unless your total
| |
| | stock, bonds and mutual fund shares for
|
| "itemizable" deductions exceed your
| |
| | the first 10 months of the year, with
|
| applicable standard deduction.Let us say
| |
| | separate net totals for short-term (held
|
| you usually do not have enough deductions
| |
| | one year of less) and long-term (held
|
| to itemize. However, after preparing
| |
| | more than one year) activity. Gains and
|
| your projected 2005 return you discover
| |
| | losses from inherited property are always
|
| that, because of some special
| |
| | considered long-term. Include in the
|
| circumstance, you will be able to itemize
| |
| | long-term calculation any "capital gain
|
| this year. During the last two months of
| |
| | distributions" from mutual funds.Now do a
|
| the year you should incur, and pay for,
| |
| | similar calculation for unrealized
|
| as many deductible expenses as
| |
| | "paper" gains and losses on the
|
| possible.If, on the other hand, your
| |
| | investments you still hold. You may want
|
| projected return indicates that you do
| |
| | to sell some of your investments before
|
| not have anywhere near enough deductions
| |
| | the end of the year at a loss to wipe out
|
| to be able to itemize, postpone making
| |
| | year-to-date gains, or at a profit to
|
| any deductible payments until 2006.
| |
| | take advantage of year-to-date losses in
|
| Making these payments in 2005 would not
| |
| | excess of $3,000.00.There are no written
|
| produce any tax savings, while it is
| |
| | in stone year-end tax planning rules that
|
| possible that by deferring them until
| |
| | apply to all taxpayers in all cases. As
|
| next year you may be able to itemize in
| |
| | with any other transaction, year-end
|
| 2006.3) The timing of deductions is
| |
| | strategies must be evaluated in the
|
| especially important when it comes to
| |
| | context of the special facts and
|
| medical expenses and miscellaneous
| |
| | circumstances of your individual
|
| job-related and investment expenses. You
| |
| | situation. You may want to review your
|
| are allowed to deduct medical expenses
| |
| | year-end situation with your tax
|
| only to the extent that they exceed 7 1
| |
| | professional.And remember - your first
|
| 2% of your Adjusted Gross Income (AGI),
| |
| | criteria for evaluating any financial
|
| and most miscellaneous deductions are
| |
| | transaction you are considering should
|
| only deductible to the extent that the
| |
| | always be economic. Taxes are
|
| total exceeds 2% of AGI.If you anticipate
| |
| | second.Robert D Flach is a tax
|
| a 2005 AGI of $70,000.00 you must exclude
| |
| | professional with 34 tax seasons of
|
| the first $5,250.00 of medical expenses -
| |
| | experience preparing 1040s for
|
| the first $5,250.00 is not deductible.
| |
| | individuals in all walks of life. He
|
| If your medical expenses to date are
| |
| | writes THE WANDERING TAX PRO weblog ( the
|
| close to or more than %5,250.00, and you
| |
| | NJ TAX PRACTICE BLOG ( and the website
|
| will be able to itemize, pay any
| |
| | which has a wealth of tax planning and
|
| outstanding medical bills and schedule,
| |
| | preparation advice and information. He
|
| and pay for, check-ups, doctor visits and
| |
| | also writes and publishes THE FLACH
|
| needed dental work in November and
| |
| | REPORT, a quarterly tax newsletter. For
|
| December. If medical payments to date
| |
| | more info on THE FLACH REPORT go to The
|
| are substantially less than $5,250.00,
| |
| | above article is taken from postings to
|
| put off paying any more medical bills
| |
| | THE WANDERING TAX PRO.
|
| until 2006. The same concept applies for
| |
| |
|
