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The Online Advisor

November 2007


What's New in Taxes
Tax-cutting time for 2007 is running out

Time is running out on moves you can make to reduce your 2007 tax bill. Some actions to consider right now:

* Be sure to max out your 401(k) plan at work. This year you can sock away $15,500 ($20,500 if you’re 50 or older).

* Establish a pension plan for your small business. You may qualify for a tax credit of up to $500 in each of the plan’s first three years.

* Make gifts to family or others to utilize your tax-free $12,000 per donee gifting allowance for 2007.

* Plan year-end business equipment purchases to take full advantage of the increased expensing limit of $125,000 for 2007.

* The option to deduct either sales taxes or state and local income taxes was reinstated for this year. If you plan to deduct sales tax, consider squeezing certain planned big-ticket purchases into 2007.

* Review your investments for possible year-end selling to rebalance your portfolio at the lowest tax cost or to offset gains and losses.

* Donations to charity require substantiation for deductibility, so get the documentation you'll need for your 2007 return. Remember, all money donations require a written record, even those under $250.

* Educators can deduct up to $250 for classroom supplies they purchase with their own money.

* Single taxpayers with income of $65,000 or less ($130,000 or less for couples) can deduct up to $4,000 for higher education tuition and fees. For singles with income of no more than $80,000 ($160,000 or less for couples), the deduction limit is $2,000.

* 2007 is the final year for those age 70½ or older to make a charitable donation of up to $100,000 from an IRA without reporting the distribution as income.

* Itemizers may deduct qualified mortgage insurance premiums this year. The policy must have been issued in 2007, and income limits apply.

There are other new and soon-to-expire provisions that could affect your tax situation this year. Call our office for planning assistance while there is still time to take tax-cutting action for 2007.



For details or for assistance with your tax planning, give our office a call.

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