Year-end Planning for 2012

Year-end tax planning is especially difficult this year due to the many uncertainties over tax laws in 2013.  In most years, accelerating income would not be top strategy based on the time value of money.  However, if you’re concerned that tax rates will be going up for 2013 due to expiring Bush tax cuts and the new Medicare tax, then we have a few suggestions that may be of use before 2013, and could help to reduce the overall burden of taxes.

Accelerate income into 2012:

• C corporations pay a special dividend 
• Sell appreciated assets
• Complete Roth IRA conversions
• Accelerate billings and collections

Postpone deductions until 2013:

• Postpone bill pay until 2013
• Pay last estimated state payment in 2013
• Bunch itemize deductions into 2013/use the standard deduction in 2012

These are a few ideas, however, it is important to remember that each tax situation is different and you must consider your unique and individual circumstances above all else.  We would be glad to help with your year-end planning in this year of complicated tax uncertainties.  Please call our office for more information or to make an appointment with a Saltmarsh tax professional at (800) 477-7458.

--Lisa Fairbanks, CPA