Income - Tax Planning Tip for 2007
If you complain because you feel you are paying far too much in taxes, you may be right. So, is the government giving you the once over when it asks for that check in April? Well, it is probably is. On the other hand, there is a person you know much better who is often also to blame. Who? YOU!
The key to minimizing your taxes is to take the time to do tax planning. This planning should be done in January for the upcoming year. “Tax planning” is not sitting down with your accountant on April 14th and trying to reduce your tax bill. If you act proactively, and ahead of time, you can do a lot to keep your money out of Uncle Sam’s hands.
As we enter 2007, you should begin to contemplate your tax planning for the year. At this point, I would typically go into a long spiel about maximizing deductions, retirement accounts and so on. While you should still do all of these things, the 2007 tax year is shaping up to be something a bit different. Why? Politics, my friend.
As you well know, the recent elections resulted in a major political change in Washington. Out went the Republican majority and in came the Democrat majority. In both houses! Regardless of your politics and whether you think this is a good or bad thing, the tax change winds are beginning to blow in the wind.
If you have been watching the fiscal figures for the federal government, you know our national debt has been expanding at an alarming rate. While there are a variety of reasons for this, the combination of tax cuts and an expensive war are certain two of the primary ones. Now that President Bush does not have a friendly Congress and is a lame duck, you should expect an effort to address the red ink. Since no exit from Iraq seems to be on the horizon, it is reasonably to suspect we will see taxes raised. This probably will not happen until later in the year or 2008, but you should be planning for it now.
When putting together you tax plan for 2007, you need to consider how you can best take advantage of the current low income tax rates. Assume you have some source of revenues or assets that trigger income tax payments when you receive the money or sell them. If any of these are going to occur in 2008 or beyond, you might consider trying to move them forward into 2007. By doing so, you can take advantage of the current rates instead of getting caught with your pants down when rates go up.
By: Richard A. ChapoRichard A. Chapo is with
BusinessTaxRecovery.com - providing information on tax debt relief.
BusinessTaxRecovery.com - providing information on tax debt relief.
