Tax Law Changes
for the Year 2000, (continued from previous
page)
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New positions on when long-term
temporary employment can yield travel cost deductions, or deductible commuting
costs;
-
The ability to make tax
payments with credit cards;
-
A new IRS ruling that permits
creative use of the option to amortize mortgage points;
-
A new slant on when a bad debt
deduction can be taken for a loan to a relative;
-
Revised positions on when a
small business owner must change an accounting period or an accounting
method;
-
Changes in the rules connected
with the new separate liability election for spouses;
-
How the annual gift tax limit
can be avoided for tuition payments;
-
When opting out of a regular
IRA or a Roth IRA makes sense; and
Changes in the rules regarding
when the IRS will deny favorable tax treatment to family limited partnerships,
and when they will be respected for tax purposes.
Just
because a tax technique has been around for a while doesn’t mean that it
doesn’t deserve reconsideration. Year-end tax planning is often necessary
to salvage an unfavorable tax position created by additional income or
lower deductions, but planning right from the start makes sense for many
strategies. Contributing to an Individual Retirement Account (IRA) at the
beginning of a tax year allows the funds to grow tax-free for a longer
period of time. The same principle applies to gifts, since they can appreciate
for the rest of the year with no further tax impact upon the donor. Many
retirement plans must be established well before year end in order to make
tax deductible contributions. Setting up a home office and following the
latest set of rules from the outset can yield significantly greater tax
benefits than waiting until tax return filing season is approaching the
end. Planning for retirement distributions and shifting retirement assets,
private annuity payments, charitable remainder trusts, medical savings
accounts, planning for tax passive investments all make more sense if begun
at the beginning of the year.
If
you have any further questions about how tax planning can maximize your
after-tax savings, please do not hesitate to contact us. We would be happy
to sit down with you to determine how to customize a variety of tax strategies
to maximize their effectiveness for you and your family.
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