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FOR IMMEDIATE RELEASE
Plan Ahead to Minimize Taxes
Lohman Company Offers Top 4 Tips to
Lower Your Tax Bill
October 25, 2006 -- Procrastinators,
beware! You may miss out on ways to cut your tax bill if you
don’t plan now to take advantage of tax savings before the end
of 2006, says Cati Piorkowski, tax partner at Lohman Company,
PLLC.
“A little advanced planning goes a long way,” says
Piorkowski. “Taxpayers should take stock of their situation now
so they don’t lose out on deductions, credits or contributions
to IRAs and other retirement plans that may reduce tax
liability. It’s also critical for taxpayers to think ahead to
avoid Alternative Minimum Tax.”
Piorkowski suggests that taxpayers spend the time now
ensuring that books are up-to-date and accurate. Consider
scheduling time with your accountant for year-end advice,
specific to your personal situation. Piorkowski says most
taxpayers can benefit by considering the following four tips:
-
Assess
Your Situation
– Take an inventory of your current situation. Make a list
of transactions and events that have impacted your income
this year. Did you change jobs? Did you sell or buy a
home? Did you sell stock? Did you get married or have a
baby? All of these events can impact your tax liability.
You may also find that there is still time to take actions
that can improve your situation. This is also a good time
to check the accuracy of your payroll deductions using the
free payroll calculator at
www.paycheckcity.com. If you find you are withholding
too much or too little for taxes, you can calculate the
impact a change in withholding will have on your take-home
pay.
-
Control
Your Bottom Line –.
The lower your taxable income, the lower your tax
liability. To achieve lower taxable income, you should look
for opportunities to defer income into the next year and
accelerate eligible deductions into the current year. While
most employees can’t control the timing of their paychecks,
self-employed individuals may have the ability to control
the timing of payments for year-end work. For retirees, you
may be able to postpone the payment of an IRA withdrawal to
defer income.
On the expense side,
consider prepaying your January home mortgage interest in
December. For best results, make the payment early enough
that it is received by your lender and can be captured on
Form 1098, the document sent to the IRS to indicate your
mortgage interest deduction. Make payments on outstanding
medical bills or charge payments to your credit card since
amounts are deductible once the charge is made to your card,
even if you don’t pay your credit card bill until after the
New Year.
Piorkowski warns that any action that changes AGI may result
in unintended side effects. For instance, lower AGI may
mean that the amount of deductible IRA contributions will be
lower. Be sure to check with your tax advisor to be sure
you have considered all the potential consequences of your
actions.
-
Take Credit(s) –
In Arizona, you can “take credit” for
your generosity by cashing in with dollar-for-dollar credits
for certain donations. These credits include up to $400 for
contributions to qualifying organizations that provide
assistance to the working poor, up to $400 for contributions
to public and charter schools and up to $1,000 for
contributions to private school tuition organization. For
more information on these tax credits, see
www.azdor.gov
and refer to publications 710 (working poor credit) and 707
(school credits) or ask your tax advisor for details.
-
Plan for the Future –
Don’t
forget to think about your retirement years by taking full
advantage of profit sharing, IRAs and 401(k) plans. If you
have a 401(k) plan at work, now is the time to plan how much
you'll contribute next year. Put aside as much as you can
stand up to the deductible maximum of $15,000 ($20,000 if
you will be age 50 or older at year end) unless your
employer has a lower limit. Your contributions are even more
important if your employer makes matching contributions,
which amount to "free money." If you are self-employed,
it’s not too late to set up a plan for you and your
employees. For information on various retirement plans, see
IRS
publication 560 at
www.irs.gov.
Piorkowski advises that these year-end tax tips will apply
differently to each taxpayer. Take the time now to review your
best strategy with a professional advisor.
About Lohman Company, PLLC
Founded in 2000, Lohman Company, PLLC is a certified public
accounting and business consulting firm offering professional
tax, audit, accounting and consulting services to
privately-owned companies in Arizona with revenues up to $200
million. Lohman Company, PLLC specializes in serving clients in
a wide range of industries including technology, manufacturing,
wholesale distribution, construction, real estate and services.
Lohman Company, PLLC is committed to providing the highest level
of proactive services to its clients within an atmosphere that
encourages camaraderie, intellectual challenge and work-life
balance for all employees.
For More Information Contact:
Lohman Company, PLLC
Stapley Center
1630 South Stapley Drive, Suite 108
Mesa, AZ 85204
Phone: (480) 355-1100
Fax: (480) 355-1130
Internet:
info@lohmancompany.com
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