Uh-Oh

A letter from my accountant Saturday sobered me up:

"…we must receive all information to prepare the corporate tax return, as outlined on page 2, for your corporation before February 15th to maximize the possibility that your return will be completed by the IRS due date of mar 16th, 2009.  If your return is not completed by March 16th, you may be subject to late filing or late payment penalties…"

Yada yada yada….do you start just glossing over with this stuff, too?  I think this is why no matter what I do, I can't get that man in the picture to come into focus.

That stuff…you know…those bank statements…are just….there…on the table… and he's staring at them.

That, to me, is the great disappointment of Christmas/New Year's.  The aftertaste is bitter, metallic.

January will be a cold, bleak, month of numbers, and likely few clients.  It's my slowest month of the year, by far. 

So…fine.  I'll just do bookwork… and gloss over.

Check out Wall Street Journal article below or click HERE to get some end-of-year tips to save taxes. (link is good for 7 days to non-WSJ subscribers)

'Tis the season to make last-minute tax-saving moves. Just don't automatically repeat everything you've done in past years.

Because of several tax-law changes and questions about what may lie
ahead in 2009, you may need to consider new strategies — or at least a
few variations on old themes.

Year-end tax planning "will be trickier than
usual" because of factors such as the stock market's volatility and the
possibility of significant tax changes next year when Barack Obama
takes over as president, says Sidney Kess, a New York accountant and
lawyer. During the campaign, then-Sen. Obama proposed cutting taxes for
most Americans while raising income taxes and capital-gains taxes for
those at the top end of the income scale. But he also indicated he
might postpone recommending any tax increases if the economy looked
shaky — as it now clearly does.

Adding to the uncertainty, "there might even be another economic
stimulus package carrying tax changes" enacted before the end of this
year, says a new, 93-page publication by the tax and accounting
business of Thomson Reuters.

A separate report by CCH, a Wolters Kluwer unit, warns that this
year is "especially challenging for year-end planning" in view of "a
flood of eleventh-hour tax law and regulatory changes." CCH estimates
there have been more than 500 changes this year to the Internal Revenue
Code.

But don't throw out your old playbook entirely. Many time-honored
techniques will still work well for most people. Among them is one that
is especially timely this year in view of sharp declines in stock and
bond prices: Consider dumping losers you were thinking of getting rid
of anyway. Those losses can be valuable for tax savings.

Also, if you're thinking of investing in mutual funds this month for
a taxable account, contact each fund or check its Web site to see
whether it's planning to make large year-end capital-gains
distributions soon. Even some funds that have lost money this year are
planning December payouts. If a fund you're considering is planning a
big payout soon that will affect your tax bill, consider waiting to
invest in that fund until after the date to qualify for the
distribution.

Here are a few other ideas that tax and investment strategists are recommending:

Timing is everything. In most cases, it pays to
accelerate deductions, such as charitable donations and state and local
tax payments, into the current year whenever possible. But that
strategy may backfire for some people this year because of an important
law enacted earlier this year: If you claim the standard deduction for
2008, you can take an additional amount to reflect real-estate taxes.
(This additional standard deduction is also available for 2009.)

This change is likely to mean some people who itemized deductions in
past years might be better off claiming the standard deduction for 2008
— and thus deferring items such as charitable donations and state and
local taxes into next year, when they might be deductible.

The maximum amount of the new additional standard deduction for
state and local real-estate taxes is $1,000 for married couples who
file jointly and $500 for singles. The basic standard deduction for
2008 is $10,900 for joint filers and $5,450 for most singles. There are
additional amounts for those who are 65 or older and blind.

Thus, a married couple filing jointly, each at least 65, and who
paid at least $1,000 of real-estate taxes, would get a standard
deduction for 2008 of $14,000, says Bob Scharin, senior tax analyst at
Thomson Reuters. (That's the $10,900 basic standard deduction plus
$1,050 for the elderly husband, $1,050 for the elderly wife and $1,000
for their real-estate taxes.)

Another complicating factor is the alternative minimum tax. The AMT,
a separate way of calculating your taxes, operates under many different
rules than the regular system. For example, you can't deduct state and
local taxes under the AMT. Thus, if you're ensnared by the AMT or claim
the standard deduction for 2008, don't prepay state and local taxes
this month that aren't due until 2009, says Mr. Scharin. About four
million people were caught by the AMT for 2007, and roughly the same
number will be for 2008. It's unclear what Congress will do about the
AMT next year.

Tax swaps. Some investors recently have been
selling municipal bonds at a loss, thus nailing down capital losses
that can be used to cut taxes, and then reinvesting the proceeds in
other municipal bonds with similar credit ratings and durations, says
Benjamin A. Pace III, a managing director at Deutsche Bank Private
Wealth Management. "We're seeing some interest lately" among wealthy
investors in this tax-swapping technique, mainly with municipal bonds,
Mr. Pace says. "You can do this without changing the nature of your
credit quality or duration."

Capital gains. On the campaign trail, then-Sen.
Obama proposed increasing the top rate on long-term capital gains, now
15%, to 20% for people making more than $250,000. With the economy in a
deep slump, it's unclear whether President-elect Obama will delay that
plan. Thus, investment advisers are urging most clients not to rush out
and sell stocks now purely to take advantage of the 15% rate, which may
remain the same next year, after all.

Whatever the case, never make any investment move based solely on
tax considerations, says Blanche Lark Christerson, a managing director
at Deutsche Bank Private Wealth Management.

Stayin' alive. Buried in the tax law is a powerful
incentive for many wealthy people who care about their heirs to stay
alive at least until the dawn of 2009. The basic federal estate-tax
exclusion, now $2 million, is scheduled to soar to $3.5 million next
year. Thus, if someone survives until Jan. 1, an additional $1.5
million of that person's estate will be sheltered from the federal
estate tax, where the top rate is 45% both this year and next.

Mr. Kess says wealthy people should also consider taking advantage
of the annual gift-tax exclusion, which allows you to give away as much
as $12,000 this year to anyone you want — and to as many people as you
wish — without any tax considerations. That amount will rise next year
to $13,000. With stock prices down sharply, more shares can be
transferred this way, he says.

Other breaks. First-time homebuyers will have until
mid-2009 to claim a new refundable tax credit for a qualifying home
purchase in the U.S., says a CCH report. But the credit must be repaid
in equal installments over 15 years, or earlier if the house is sold.
Thus, it's effectively an interest-free loan from Uncle Sam, CCH says.

Congress also extended the life of several popular breaks that had
expired. Among them is one that allows taxpayers who itemize to deduct
their state and local sales taxes instead of their state and local
income taxes. This law, which was extended through 2009, is especially
important for taxpayers who live in Florida, Texas, Washington and
other states that have no income tax. But it also benefits millions of
other people in many other states.

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