Many Americans are getting ready to take vacations and visit family this time of year.
But before you relax .... it might pay off to do some tax planning. Get out a check ... and make your January mortgage payment ... before January ... if you'd like a bigger tax deduction for 2007.
Keep in mind the mortgage company has to receive ... not cash your check by the end of the year ... for it to count in this tax year.
You might also want to delay your mortgage payment.
"You really have to look at what your 08 income will look like, if a higher income year, then might make sense to keep deductions for 08 verses accelerating into 2007."
Make the same decision when it comes to taking a year end bonus .. if you have the leeway of choosing 07 or 08.
And paying any remaining business expenses.
This year in particular ... tax planning may mean taking a look at any losses or gains you may have in what's been a volatile stock market.
"With our clients we're doing a lot of tax loss harvesting, we call it around here."
Meaning selling stocks or mutual funds that may have been losers .. to offset some of your winners and the capital gain you'll have to pay .. if it's not in a retirement account.
"And to the extent they exceed your capital gains, you can deduct $3000 .. Offsetting ordinary income on your tax return."
If you still have more losses than that .. they'll carry over into future tax years.
Finally a new rule is being enforced this year by the IRS when it comes to charity deductions.
"You must have a receipt or cancelled check for every charitable contribution."
So if you donate cash to your church ... get a receipt.
A couple of clever things to consider when it comes to giving to charity if you're a big giver.
You can donate stocks to charity. You'll get the full tax deduction, but won't have to pay any tax on any gain you might have in those stocks.
And this year only ... if you're at least 70 and a half you can give up to $100,000 from an IRA to a charity .... tax free. That break ends in the New Year.
