CHECK BACK FOR UPDATED INFORMATION AS NEW INFORMATION IS
UNAVAILABLE AT THIS WRITING BUT IS COMING SOON
Now is the best time to start thinking about your year end
tax planning. These tax strategies can be put into effect by the
end of the year and some as late as when the tax return is due.
Planning now will save you money and reduce your tax liability
not only with your IRS taxes but also with your state taxes.
Here are tax tips that will help you accomplish your goal.
HELP FOR HURRICANE VICTIMS
For specific information for Katrina and Rita hurricane
victims go to
www.dgoodmancpa.com/katrinahurricane.htm.
MINIMIZE YOUR CAPITAL GAINS
Review your capital gains and losses for the year including
taxable investment accounts and taxable real estate sales. If
you have net capital gains, you may want to sell some of your
investments that have a loss to offset the gain. You should also
check your 2004 tax return for any loss carry forwards to 2005.
SALES TAX DEDUCTION
Taxpayers who itemize deductions can choose between claiming the
state income tax or sales tax as a deduction. The IRS will
provide optional tables for use in determining this sales tax
deduction if tax payers do not keep their receipts throughout
the year. Sales tax paid on motor vehicles and boats may be
added to the table amount up to the general sales tax rate.
EDUCATOR'S DEDUCTION
Eligible educators are permitted an "above-the-line" deduction
up to $250 per year for non-reimbursed expenses incurred in
connection with books, supplies, computer equipment and
supplementary materials used in the classroom.
OPEN AN INDIVIDUAL RETIREMENT PLAN ACCOUNT (IRA)
See
www.dgoodmancpa.com/smallbusinessretirementplan.htm#INDPLAN
for an example of what you can do to defer income until
retirement. You can open your 2005 IRA as late as April 15th of
2006. You may want to consider a Roth IRA. They are not tax
deductible but also are not taxable when withdrawn at
retirement.
NEW ENERGY CREDITS AVAILABLE FOR 2006
New credits are available in 2006 for alternative motor
vehicles and residential energy expenses. Information is coming
about this so you may want to check back or bookmark this site
(ctrl + d) or check the irs.gov website for updated information
before you make these purchases in 2005. Please note these are
credits and not deductions so they could have a significant
impact on your taxes since they are a dollar-for-dollar
reduction to your tax bill.
GET ORGANIZED
Clients always ask me what I need in order to do their taxes.
For 90% of the population, with a little organization, your tax
preparation doesn't have to be overwhelming and can cost less if
you submit organized documents to your tax professional. First,
when you get those tax documents in the mail, have a folder
ready to just drop it in there and forget about it until tax
time. Most tax documents are required to be mailed by January
31st so you should have almost everything by the first week of
February. If not, call to have them send a duplicate. Next, go
through your check book, credit card statements and cash payouts
for the basic deductible items. This would include your medical
expenses including eye glasses, taxes paid including vehicle
registrations, donations and any employer expenses that were not
reimbursed. Don't forget day care expenses, student loan
interest and tuition if any of those apply to you.
NEW SIX-MONTH EXTENSION
And for those of you who aren't able to get your return
finished by April 17th, 2006, when you file your Form 4868
extension it will now be good for six months automatically
rather than the previous four months.
TAX PLANNING FOR YOUR BUSINESS
Go to
www.dgoodmancpa.com/yearendtaxplanningbusinesses.htm for
what you can do to prepare your business for year end.
These are just some tax tips you should consider when thinking
about your year end tax planning. If you have a specific
question about your particular situation, e-mail me at
dianne@dgoodmancpa.com and I will help you work through the tax
planning issues you may have. This article was intended to
provide general information about year-end tax planning. It does
not contain all the rules and exceptions that may apply to your
situation. If you have further questions regarding year end tax
planning, I can be reached at
www.dgoodmancpa.com.
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2005 Year End Tax Planning and Preparation for Individuals - Tax
Tips for 2005 by Dianne Goodman, visit
www.dgoodmancpa.com for
more content like this.
About the author:
Dianne Goodman, CPA - Specializes in servicing Small Businesses
and Individuals. Visit
www.dgoodmancpa.com for relevant and
current information on a variety of financial and tax issues
focusing on small businesses and individuals or call at
1-888-851-1975.
CONTACT INFORMATION
Dianne Goodman, CPA Comprehensive Small Business Solutions, PC
505 323-2307 1 888-851-1975 toll free
www.dgoodmancpa.com
