In the remaining weeks, it is important that you familiarize yourself with some of the options that are available to shift income and expenses into 2000 or 2001, depending upon how the tax laws and amendments affect you.

If you expect your 2000 taxable income to be MORE than 2001 (you expect a decrease in taxable income in 2001), you can do some of these suggestions.

1. Ask your boss to delay that handsome bonus until 2001 (unless that will be enough to make you jump to the next “bracket” in 2001).
2. If you are self-employed, delay your billings and the receipt of business income into 2001.
3. If you itemize deductions on Schedule “A,” you can
   • Pay your January 2001 mortgage payment in 2000. Be sure your check arrives at the bank or other financial institution by December 31 to be included in the annual Form 1098 (includes interest paid during 2000).
   • If you have already paid medical and dental bills (including health insurance) sufficient to exceed 7.5% of Adjusted Gross Income, be sure to pay all doctors, hospitals and that next monthly insurance payment in 2000.
   • Make that charitable contribution before the end of the year. If you are short cash, use your bank credit card to make that contribution.
   • Consider paying the remainder of the year’s Real Estate tax bill by December 31.
   • Make the January 15th state estimated tax payment in December.

If you expect your 2001 taxable income to be MORE than 2000 (you expect an increase in taxable income in 2001), you can do some of these suggestions.

1. Make sure your boss pays that handsome bonus in 2000 (unless that will be enough to make you jump to the next “bracket” in 2000).
2. If you are self-employed, send out your billings now and attempt to obtain the receipt of business income in 2001.
3. If you itemize deductions on Schedule “A,” you can
   • If your December mortgage payment is due at the end of the month (and you won’t get into trouble by delaying it), pay it just after December 31 to be included in the annual Form 1098 (includes interest paid during 2001).
   • If your 2000 payments for medical and dental bills (including health insurance) are NOT sufficient to exceed 7.5% of Adjusted Gross Income, be sure to pay all current doctors, hospitals and that next monthly insurance payment in 2001.
   • Make that end-of-year charitable contribution after December 31. ? Make the January 15th state estimated tax payment in January.

For all others, you can think about this:

1. If your financial planning shows it to be wise for you, convert your regular IRA accounts to Roth IRAs in 2000. If you are not sure about it, consult with a professional.
2. If you are thinking about going into a mutual fund or increasing your investment in a mutual fund during the month of December, please be careful. December is the month when most mutual funds make their “capital gains” and other year-end distributions. The result is taxable income to you while the price of the fund is adjusted to compensate for the distributions. Your net outlay is the tax on those distributions. Call the mutual fund and find out when they will be issuing year-end distributions, and make your investment just after.
3. Do you support your parents or a low-income person (under $2,800 of gross income)? Under the correct circumstances, that person may appear as a dependent on your tax return giving you additional deductions. Medical expenses you paid for that dependent in 2000 should be deductible to you on your Schedule A.
4. Do you know where your capital gains will be for 2000? How about 2001? Should you shift something into either 2000 or 2001?
5. What is the current status of your IRA? Are you over age 70½? Should you move your IRAs to a better investment or consolidate them to make it easier to watch or invest?
6. If you are self-employed (including that part-time business), have you established a Keogh or SIMPLE IRA before the December 31 deadline?

Take the time now to find out. It just might save you a lot of money when you file your income tax returns.

If you buy the shares right before the record date, you will receive a taxable distribution, which may NOT reflect an increase in the value of the fund. This means you pay a tax on a “phantom” gain. Consider waiting until the record date to invest taxable accounts (i.e. non-IRA).

If you are not sure, call the mutual fund or us and ask about the record date for capital distributions.