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Now
that we are past the middle of the year it is a perfect time to see where
you stand. Consider it your 182
day tune up (don’t forget it’s leap year).
So grab your 2003 tax return, this year’s tax information through
June 30 and get your calculator revving.
Planning now and taking some simple steps before year end can help
avoid “sticker shock” when your 2004 tax return is completed.
Compare
the different income and deduction categories for this year with 50% of last
years to see where you are ahead and if you are behind.
This advice is not just for individuals but for partnerships and
corporations. Some personal
areas to look at include:
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Income.
Are your wages significantly different than last year?
Do the tax withheld and estimated tax payments compare with the
percentage increase or decrease? How
are your earnings from self-employment compared to last year?
If it is considerably higher, do your estimated tax payments need to
be increased to cover the self employment tax? Also,
if your earnings are up or down, consider if you will be eligible for some
tax credits or if you will lose tax credits you had last year.
Is it possible to take actions to reduce your 2004 taxable income?
§
Investments.
Do you have unusual gains or losses this year?
Should you offset gains or losses with sales later this year?
Remember, you can only deduct up to $3,000 of net capital losses each
year ($1,500 if married filing separate).
§
Deductions.
Have your itemized deductions changed?
Did you refinance, possibly lowering your mortgage interest
deduction? Are your charitable
contributions in line with last year? There
is plenty of time for additional donations.
Are you above the standard deduction to even benefit from itemizing?
Any significant medical bills? Do
you have children entering college with qualifying expenses eligible for
either a deduction or tax credit?
§
Retirement
contributions. Are you
maximizing your contributions to tax friendly accounts?
Have you made an IRA contribution for 2004?
How are your contributions to your employer’s plan so far this
year? How much could you have
put into a self employed retirement plan based on the first six months of
net self employment income.
§
Depreciation.
How does depreciation compare to last year?
Is your purchase trend similar to last year?
Can you expense assets using Section 179?
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Retirement.
Will you begin receiving social security or distributions from IRA or
pension accounts in 2004? Should
you have tax withheld or increase quarterly payments?
§
Pass-through entities.
Do you receive income from an S corporation, partnership or trust?
If you have access to the books see how this year is compared to
2003.
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