End of
Year Tips
Considering that, The Goebel Team would like to give you some good news. We have found some information we would like to share with you. Below is an article with some year-end tips!
It's All In the Timing
Most of our tax experts' advice boiled down to one basic premise: Defer income on your real estate as long as possible, and accelerate expenses as quickly as possible.
"Most people have the idea that if they can get a bigger deduction now, they'll take it and they'll worry about next year when they get there," says Scott Estill, a tax attorney in Denver, Colo.
That said, Estill suggests that one simple way to lighten your tax burden in the coming year is to delay the receipt of payments on rental properties until after the first of the year.
"If you collect rent on Jan. 1, the income from that payment won't be taxed until next year," Estill says.
By the same token, if you make your mortgage or property tax payments early — payments which may not be due until after the new year — your mortgage interest deduction will be larger, or you can deduct the early tax payment from your current-year income.
Embrace The Holiday Spirit
There are a number of holiday activities that could and should be used to your tax advantage. Bill Bronchick, an Aurora, Colo.-based attorney and author suggests that you go ahead and splurge on holiday celebrations; after all, if you invite business acquaintances, the entire event may be tax deductible.
"It is certainly legitimate to take a deduction for a holiday party — if it's primarily for business," Bronchick says. "That means you can deduct any expense related to the party, whether that means you bought new wine glasses for it or paid to have a cleaning person come the next day."
And as the winter holidays are a time for giving, feel free to donate to charity any odd, old or unwanted items before the end of the year — and take a tax deduction for it in April. Although it may not amount to significant savings, most charities that accept donations will allow you to assess the value of your own donation, so you are essentially determining the size of the deduction you can take. (Remember when Bill Clinton donated his old underwear and then took tax deductions, valuing the underwear at $2 per pair?) If you donate real estate, you can take a larger deduction, but the size of the deduction is determined by the market value of the property, rather than your own assessment of its value. If you donate undeveloped land to a church, for example, you may deem the property to be worth $60,000, but if an assessor values it at $25,000, the size of your deduction will be $25,000 (see "Donation Motivation").
Pay Off Your Debt
All those Americans who took advantage of 40-year-low interest rates to take out equity loans on their homes, and who also have credit-card debt, may wish to pay off their credit-card debt with the equity loans before the year ends. The idea is that if you pay off your credit-card debt with your home equity loan, you can deduct the interest on the payment; the interest on your credit-card debt normally is not deductible, unless the expenses on your credit card are incurred for business purposes.
Another nifty tax break, which is often overlooked, according to Estill, applies to people who have sold their homes this year. The points paid on a mortgage on your primary home are deductible, but they are amortized over the life of the loan. For example, if you paid points on a 30-year mortgage, every year you would deduct one-thirtieth of the points you paid upfront. During the year that you sell, however, you can accelerate the amortization so that you can deduct the remaining value of the points you paid.
"A lot of people miss this, but it could put a thousand or a couple thousand dollars in your pocket," says Estill.
And a couple thousand dollars saved is a couple thousand earned — until the IRS makes a grab for it the following year.
http://abcnews.go.com/Business/story?id=89886&page=1
For more, go to Forbes.com..
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