Tax planning for 2010 may require an understanding of one of the most complicated tax years in recent memory.Â This year represents a critical time to ascertain and identify any tax traps while maximizing opportunities for dramatic tax savings. Next year may truly be too late …
Â There have been no less than six tax Acts this year, and more changes are anticipated after this election cycle. As always, the key to effective tax planning is to estimate your anticipated income levels not only for 2010 – but also for the next couple of years.
Â Although the typical tax planning wisdom has been to avoid paying any taxes for as long as possible, this strategy may have to be dramatically altered. Deductions may be worth a great deal more in a year or two.
Â Any tax projections may require you to predict a series of unknown future events, and make educated guesses and reasonable assumptions. Remember, no tax strategy is cast in stone until the time for changing strategies has passed. Tax planning is a dynamic process, and the earlier you start, the better.
Â Here are some basic principles that can help guide your overall thinking:
- Â If you expect your tax rate will be higher next year, you may want to accelerate income into this year and defer deductions into next year.
- Â If you think your tax rate might be lower in 2011, consider deferring income to next year and accelerating deductions into this year.
- Â Remember to pay careful attention to your marginal tax rate – the highest rate at which your last, or marginal, dollar of income will be taxed.
- Â Without additional legislation, overall tax rates are scheduled to rise in 2011. However, if your 2011 income will be substantially lower than 2010, your marginal tax rate may decrease.
Â We believe proactive tax planning is the key to keeping more of your income.Â Proactive tax planning means analyzing your income and expenses for every available deduction, credit, and opportunity, without the need for “aggressive” strategies, “gray areas” or “red flags.”
Â We have recently implemented a new tax planning tool, that will help us more than ever before, to identify and explore opportunities with you to cut your tax bill.Â Innovative analysis, combined with our years of experience, gives you the proactive advice you need.
Â The critical step is to meet with us now, during the 2010 tax year, while there is still plenty of time to consider and implement appropriate planning strategies.
Â Our tax planning and coaching services give you a plan for legally beating the IRS.Â Please contact uswithin the next couple of weeks todetermine if 2010 tax planning makes sense for you. If you are ready to start planning, please callÂ to begin.David Bradsher, CPA