Tax Planning in July, What to Do, What to Watch Out For

I know, you just filed your taxes, or worst you have applied for an extension and plan to file by October 15th of this year for 2012.

The truth is, savvy taxpayers are planning for their 2013 tax year now.  Here  is a list of task they complete in order to fine tune their taxes for the coming year:

1.  They have a copy of their last pay check stub in June of 2012.  They will visit either Forbes article and links to tax calculator, or the IRS tax calculator web site and put in the necessary information to determine if they will owe taxes or will receive a refund.

2.  They will input their 2013 tax information into their 2012 tax software to get a solid idea of what they will be up against in 2013.  They will remember that they are using the tax tables for 2012.  They ALSO will remember that Congress may make some last minute tax changes towards the end of the year.

3.  They will try to leave an opening to respond to last minute tax law changes.  (Like giving more to charity or paying a second or third mortgage payment in December, which will increase their mortgage interest for the year.

4.  If they are expecting a new baby in the family, they will check with the doctor to be sure the kid will arrive prior to December 31st!  If the doctor said twins, they will will want to make twice as sure of the delivery date!

5.  If they haven't purchased a home, and their tax planning show an amount owed, then they are making the necessary arrangements to purchase property ASAP

6.  If they have stock that hasn't moved in recent years, and they aren't even sure that the company is still in existence, they will want to prepare to take a lost on the stock.  If they are concerned about a stock that has no possibility of recovering, then they will sell the stock now, to be sure that they get at least a $3000 loss. 

7. They are eyeing certain furniture, clothing and household items that they can truck over to the Goodwill and get a written receipt for the donation.  Of course they are also shopping for the replacement of the furniture, clothing and household items.

8.  They are looking at qualified exempt organizations, which they can write a check (cash) and receive confirmation in writing. 

9.  They actually spend an evening doing "what ifs" to determine if it might be better to turn in the car and lease a car in the business name.  If they don't have a business, yet they have a large write-off in miles driven for work, they are reviewing all of the possibilities to get the largest tax write off.

10.  Most importantly, they are making sure that they don't trigger the AMT (Alternative Minimum Tax) on their 2013 tax-return.  You can learn more about the AMT tax by visiting the IRS web site; AMT Tax.  In summary the AMT  tax is imposed at a nearly flat rate on an adjusted amount of taxable income above a certain threshold.  It can get a little complicated.  If you trigger this tax, contact an experienced tax professional to help determine what you can do to try and avoid the tax.
(Line 45 Form 1040; 2012; Form 6251)

If you are set to earn over $250,000 in 2013, this article won't do you much good, it is highly recommended that you contact your CPA, immediately.