Before I get to taxes I want to let you know about some breaking Presidential election news.
Click here and then click on the Election 2008 News Channel 3 box for this late-breaking news.
Now – on to our topic for the day –
It is that time of the year again – time for year-end tax planning.
Last year at this time I wrote a series of posts on the topic of Year-End Tax Planning, which, for the most part, still apply.
Here are links to the series -
You will also find a year-end tax planning item in the post STUFF.
Here are some things that you should be aware of when reading these posts and planning your year-end strategies –
(1) It is difficult to predict what the 2009 Form 1040 will look like. I quoted IRS HITMAN Richard Close yesterday in SOMETHING’S COMING as correctly saying, “Regardless of which candidate is elected, 2009 is going to be a year of change. Of course I’m mostly talking about the IRS. From simple things like forms, all the way to policy changes, things are drastically going to change.”
For one thing, while the special “0” capital gains tax rate for those in the 10% and 15% tax brackets is currently in effect through 2010, Congress may change this next year. Depending on who sits in the Oval Office there may be differing changes to the capital gains tax structure. So one should try to maximize the benefits of the “0”% tax rate in 2008.
The bottom line when the next tax year is such an unknown is that one should follow “traditional” tax planning strategies – defer income and accelerate deductions. There is no need to try to “second guess” the new Congress.
(2) Congress has already passed the annual AMT “patch” for 2008. However, the AMT is also an area that may be greatly revised, or even abolished altogether, in 2009.
(3) Congress has also extended the various popular tax breaks that expired on December 31, 2007 for two years. So the following items are in effect for both 2008 and 2009 -
* The option to deduct state and local sales tax instead of state and local income tax.
* The above-the-line “adjustment to income” for qualified tuition and fees.
* The above-the-line “adjustment to Income” for up to $250 in educator expenses.
* The residential energy tax credits.
* The ability to make tax-free transfers directly from an IRA to a qualified charity.
(4) You can click here to download a PRELIMINARY YEAR-END WORKSHEET and here to learn WHAT’S NEW FOR 2008.
So – any questions?