Savings Opportunities for 2008

Tax laws are constantly changing; and this year is no exception. There has been a world of changes and opportunities. With proper planning, you can save month in taxes in 2008. Here is a sampling of the opportunities:

CAPITAL GAINS AND DIVIDENDS
The maximum tax rate on new long term capital gains and qualified dividends for taxpayers in the 15% or 10% regular income tax brackets is reduced form 5% to 0%. As the stands right now, the 0% rate is scheduled to remain in effect through 2010.

This may be a good year to have your children sell securities that have increased in value. However, such sale may trigger the “kiddie tax”.

The tax break isn’t just limited to low-income taxpayers. If you can push your taxable income for 2008 below the cut-off point for the regular 25% tax bracket, your long term capital gains and dividend income could qualify for the 0% rate.

SMALL BUSINESS ASSETS
Under the new economic stimulus law, your business can deduct up to $250,000 of business assets placed in service in 2008. In addition, a firm may elect bonus depreciation equal to 50% of the cost of any qualified assets.
If transacted properly, your firm can combine the improved Section 179 deduction with the bonus depreciation. Your regular depreciation deductions may be claimed for any un-recaptured cost.

MORTGAGE INSURANCE
Congress previously approved a one-year deduction for mortgage insurance premiums in 2007. A full deduction was available for taxpayers with and Adjusted Gross Income of under $100,000. Once income exceeded that threshold amount, the deduction was phased out. The new mortgage relief law extends this tax break for three years, through 2010.

IRA CONTRIBUTIONS
If you contribute to an IRA, the contributions may be fully or partially deductible. Although deductions are generally not available to high-earning taxpayers, if either spouse participates in an employee’s retirement plan, contributions may still grow on a tax-deferred basis until withdrawn.
The contribution limit for 2008 increased from $4,000 to $5,000. If you are age 50 or older, you can increase the deduction by an additional $1,000. The deadline for contributions, for 2008, is April 15 of 2009.

GIVE OUR OFFICE A CALL
With the complexity of the tax laws, understanding what tax planning to use in your end-of-the-year tax planning strategy can be a daunting task. While this letter hopefully gives you a heads up on several strategies that you might like to use before year end, there are many more techniques that can be used depending on a client’s individual circumstances. For a more detailed plan, give us a call at (702) 642-8953 or write me at isueirs@aol.com.

Remember, we save you taxes and keep you invisible to the IRS. No exceptions. No time limits. No IRS