No matter how much you earn during the year, what really counts is what you get to keep (after-taxes). That is why tax planning should be an all year-round effort. Effective planning today may not only reduce your 2002 tax liability, it can help you lessen the confusion at tax time next year.

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 2002 or 2003, depending upon how the tax laws and amendments affect you.

If you expect your 2002 taxable income to be MORE than 2003 (you expect a decrease in taxable income in 2003), you can do some of these suggestions:

• Ask your boss to delay that handsome bonus until 2003 (unless that will be enough to make you jump to the next “bracket” in 2003).
• If you are self-employed, delay your billings and the receipt of business income into 2003.
• If you itemize deductions on Schedule “A,” you can pay your January 2003 mortgage payment in 2002. 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 2002).
• 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 2002.
• 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. In Massachusetts and some other states, the 2003 real estate tax bill, although paid in quarterly or semi-annual payments during both 2002 and 2003, is really a liability as of July 1, 2002. If you have already made two quarterly payments in 2002, consider paying the other two quarters before December 31, thereby getting a tax deduction in 2002. By the way, this will not work if you are paying your real estate taxes through an escrow payment made to your bank.
• If you think you will owe income taxes to the state, consider making an estimated tax payment by December 31, 2002 instead of next January 15.

If you expect your 2003 taxable income to be MORE than 2002 (you expect an increase in taxable income in 2003) AND you expect to be in a higher tax bracket in 2003, you can do some of these suggestions.

If you itemize deductions on Schedule “A,” you can

For all others, you can think about this:

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.

Do you know where your capital gains will be for 2002? How about 2003? Should you shift something into either 2002 or 2003?

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?

If you are self-employed (including that part-time business), have you established a Keogh or qualified retirement plan before the December 31 deadline?

Pushing deductions into 2002 may not always be worthwhile. If you will not be able to itemize deductions on Schedule A in 2002, these "extra" amounts will be wasted. It might be better to hold them off until 2003 when you may have enough deductions to allow you to itemize as opposed to using the standard deduction. Take the time now to find out. It just might save you a lot of money when you file your income tax returns.

Many accountants view their goal as minimizing their clients' taxes. NOT ME! I like to see my clients pay more taxes - because their earnings and profits are increasing dramatically. In addition to minimizing clients’ taxes, I can help my clients with strategies designed to help them achieve those profits. Talk to me and find out more.

If we can help with any of these tax-planning measures, please call.

A friendly "Thank you!" for your patronage during the past year and for the confidence you have placed in us. We will always do everything we can to assure complete satisfaction. We are looking forward to many more opportunities of serving you in the future.