Friday, December 1, 2006
For What It's Worth: Tax Tips
During the holiday season, many of us are scraping by just to pay for all the presents. But this year, not only can you save money, you can make money. As 7's Craig Stevens explains For What It's Worth now is the time to take advantage of all those tax deductions.
WSVN -- For Michael and Zaida Ross, the numbers don't lie.
Twenty-four years of marriage, three kids, one dog and an unbreakable bond.
But over time, the couple has learned that a long-lasting relationship requires long-term planning.
Dr. Michael Ross: "The end of the year is always a stressful time because of the holidays and the issues that have to be resolved -- and of course tax planning is very stressful because you want to get things right."
To get things right before the end of the year, you need to put yourself in a position to receive a variety of tax breaks.
Ken Wurtenburg: "We do nickel and dime things to add up to dollars, and that's what year-end tax planning is. It's a little bit of this and a little bit of that to add up to thousands of dollars in tax savings."
According to 7 News financial expert Ken Wurtenberg, people who are self-employed can start by what is called "shifting their income."
That means, if you're worried about moving to a higher tax bracket, you can defer paying income tax until 2007.
Ken Wurtenburg: "If you are self employed for example, you can create a scenario whereby you don't bill all your clients at the end of the year, but you bill them in January."
If you're a small business owner, you can also make sure you buy computers, desks, and other work-related items before the end of the year.
Ken Wurtenburg: "It's very popular at the end of the year for people to go out in small businesses and buy all the things that they need, they make a laundry list to minimize tax liability."
But if you're not self-employed, you can still save by using a strategy called bunching your deductions.
That is when you pay your real estate tax twice in the same year.
Ken Wurtenburg: "Therefore you will have a double real estate tax deduction and that may get you over the hump and now you can do an itemized tax return."
And don't forget the new tax laws for 2006.
If you purchased anything to save energy -- from solar panels to a hybrid car -- that's a write off.
Ken Wurtenburg: "Right now the hot thing is a lot of energy credits for appliances, for vehicles -- there are caps on them but they are tax credits."
Michael and Zaida are satisfied with their savings.
After visiting their accountant, they now have more money to spend on each other and their family -- and it's just in time for the holidays.
Zaida Ross: "When you're sick, you go to a doctor to make you better. Tax planning is something I would never attempt to do myself."
Also remember, seeing an accountant can save you money in more ways than one. In fact, paying a qualified tax professional is a deduction.
FOR MORE INFORMATION: