Articles
Save Money On Taxes By Year's End
The end of the year is quickly approaching, which means
businesses and individuals have only a short time left to take
advantage of several tax saving opportunities. Beth Cohn, a
certified tax attorney and CPA for the law firm of Jaburg &
Wilk, offers some insider tips on saving money on taxes before the
end of the year.
Many tax benefits are tied to or limited by adjusted gross
income (AGI). The annual deductible contribution limit for an IRA
for 2007 is $4,000. Individuals who are active participants in a
plan may also make deductible contributions to an IRA, but are
limited in the amount depending on their AGI. The annual limit for
401k contribution is $15,000 for 2007.
Deduction timing is also an important element of year-end tax
planning. If you are a cash-method taxpayer, remember to keep the
following in mind:
- An expense is only deductible in the year in which it is
actually paid.
- Date checks before the end of year and mail them before January
1,2008.
- You can take deductions if you pay with money borrowed from a
third party, such as credit card, even though you won't pay your
credit card bill until 2008.
- Consider making charitable contributions at the end of the
year. This will give you use of the money during the year and
permit you to claim a deduction as well.
"Individuals who are involved in conservation efforts may have
an extra reason to celebrate this season," said Cohn. "In 2007, a
credit is available for purchases of motor vehicles powered by
alternative fuels, and tax incentives are available to taxpayers
who install certain energy efficient property, such as solar water
heating," added Cohn.
Finally, there is good news for employees of small business who
have not had a pension plan available to them. Small business
employers that have not had a pension plan for the preceding three
years may claim a nonrefundable income tax credit for the expenses
of establishing and administering a new retirement plan for their
employees.
Certain changes in the tax laws are complicated and it is
recommended that businesses consult a legal professional before
making significant decisions.
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