Time is running out on moves you can make to reduce your 2009 tax bill. Some actions to consider right now:
- Be sure to max out your 401(k) plan at work. This year you can sock away $16,500 ($22,000 if you’re 50 or older).
- Establish a pension plan for your small business. You may qualify or a tax credit of up to $500 in each of the plan’s first three years.
- Plan year-end purchases of new or used business equipment to take full advantage of the higher expensing limit of $250,000 for 2009. Purchases of new equipment (not used) can qualify for first-year 50% bonus depreciation.
- Get your investment records in order so you can make wise year-end sell decisions, either to rebalance your portfolio at the lowest tax cost or to offset gains and losses.
- Track down reinvested dividends for any stock sold in 2009. They’ll add to your cost basis and reduce taxable gain or increase deductible loss on the sale.
An important part of our service to you is to help identify actions you can take before year-end to minimize your 2009 income tax bill. Accelerating deductions, delaying income, contributing to retirement plans, and taking investment losses are just a few of the strategies you might want to consider. There are also tax credits that require careful planning or they may be lost. If you’d like to discuss tax-cutting options that fit your particular situation, please contact us soon for a year-end planning review.