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Save Money and Reduce Your IRS Bill With Simple Year-End Tax Tips

Save Money and Reduce Your IRS Bill With Simple Year-End Tax Tips

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Published by Michael Rozbruch
The best way to get the maximum income tax relief possible is to look at the calendar and note these self-employed independent contractor tax tips to help you maximize tax deductions while avoiding back taxes and IRS penalties. While these income tax relief tips are geared toward self-employed independent contractors, many of them apply to almost any taxpayer looking to get a nice holiday present of income tax relief.
The best way to get the maximum income tax relief possible is to look at the calendar and note these self-employed independent contractor tax tips to help you maximize tax deductions while avoiding back taxes and IRS penalties. While these income tax relief tips are geared toward self-employed independent contractors, many of them apply to almost any taxpayer looking to get a nice holiday present of income tax relief.

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Published by: Michael Rozbruch on Nov 27, 2009
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11/26/2009

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 Save Money and Reduce Your IRS Bill With Simple Year-End Tax Tips
10 things taxpayers can do before December 31, 2008to reduce the tax bill due on April 15, 2009
In this troubled economy, tax planning has never been more important, andsmall businesses and individuals can get started on trimming taxes now,before the end of the year.It has been a bad year for many, so it’s crucial to employ financial strategiesthat can help alleviate potential IRS increases and minimize tax liability.What I do as a tax resolution specialist is help reduce a client’s IRS debt,which is essentially conducting financial planning in reverse. So I know howimportant it is for people to know their taxpayer rights in the first place sothey can avoid tax trouble as well as save money.For 2008, savvy income and deduction management can help taxpayersmake the most of a bad year. People will also want to consider maximizingannual contributions to retirement plan accounts, using long term capitallosses to offset long term capital gains, and taking advantage of popular taxbreaks extended for 2008. These days, no one can know for certain what their future income will be likeor what direction the financial markets will take. Plus tax rules can change,especially with a new Presidential administration and a new Congress. Therefore the general rule is that the more prepared you are now, the lessyou will likely owe later when the taxman comes.So start getting your 2008 taxes ready with these simple tax tips that canhelp you reduce stress and save money.
1.
Accelerate your deductions into 2008.
You want to essentiallybunch together your deductible expenses into 2008 if you can. Forexample, if you make state estimated state income tax payments, youcan make them on December 31 so you get the deduction (on yourfederal return) in 2008. You can also charge these expenses on yourcredit card(s) in 2008, receive the deduction in 2008, even though youwon’t be paying for them until 2009.
6345 Balboa Blvd, Suite 195Encino, CA 91316Phone: (866) IRS-PROBLEMS or (818) 774-1813Fax: (818) 774-9361Web: www.TaxResolution.com
 
2.
Defer income into the 2009 so you don’t pay taxes on it in2008
. If you’re self-employed or an independent contractor (like acarpenter, electrician, plumber, psychologist, psychiatrist, chiropractor,doctor, etc.) you can do work now in 2008, but not send out theinvoices to your customers till January 1, 2009. This is perfectlylegitimate and you won’t have to pay taxes on that income till youreceive payment in 2009.
3.
File your return on time, even if you don’t have the money topay your tax bill.
If you can’t afford to pay your taxes, you can stillfile your return on time and save 25% on the failure to file penalty rightoff the bat. What many people don’t understand is that filing anextension just puts off the inevitable, because it’s not an extension of time to pay, it’s just an extension of time to file.
4.
Accelerate your medical expenses.
If you itemize your deductions,there’s a limitation on medical expenses and you may deduct only theamount by which your medical care expenses for the year exceed7.5% of your adjusted gross income. So if you have any medicalprocedures or dental procedures that you’re putting off, now is thetime to get them done. You don’t have to pay for them necessarily, youcan put them on a credit card and just pay the minimum balance onthe credit card, but you can take the full deduction of the year that ittook place.
5.
Pay you’re an extra’s month’s worth of the mortgage.
Makeyour January mortgage payment in December, so you get can deductthat interest in 2008.
6.
Pay your property taxes early.
Pay your property taxes that aredue in 2009 by the last day of 2008 to accelerate that deduction.
7.
Long term capital losses can be used to offset long termcapital gains
. If you had gains at the beginning of the year and lossesnow, you can use those losses to offset gains. If you have more lossesthan gains they can only be used to offset 300 of ordinary income peryear. Please keep in mind though that unrealized (not actually sold)losses, especially those in retirement accounts are not deductible.
8.
Use gift contributions to lower your tax liability.
In terms of giftgiving, you can transfer up to $12K per person per year without payinggift tax on the amount transfers. If you have married grandparent, theycan give $24K per person by splitting there fist. In 2009, that exclusionrises to $13K each. Persons over the age of 70 ½ can contribute up to$100,000 from their retirement accounts to a charity of their choicewithout paying taxes on that income.

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