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Save Money Now With Year End Tax Planning

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This week’s topic will be short but can save you money.  It is now the time of year to start taking action to save on your tax bill.  If you are a business owner, tax expense is one of your biggest line items after payroll.  A C-Corp manufacturing company that has $100,000 of taxable income will have a federal tax bill of $22,250. If taxable income is $335,000 the tax bill will be $113,900 – a 34% flat rate.  For your information, I have included the tax rate schedule for 2009 below:

Income range       Tax Rate     Tax

0-50,000                     15%         7,500

50,000- 75,000        25%        6,250

75,000 -100,000      34%        8,500

100,000 -335,000    39%      91,650

If you are considering your individual taxes, there are many reasons to plan as well.  Some of the basics of tax planning involve your ability to shift income forward or backward depending on your anticipation of future events.  For example, if this year will be a down year for income due to the economic conditions, consider delaying some itemized deductions into the next year when you may have higher income.  This can be done for mortgage interest, real estate taxes or even charitable contributions to name a few.  Also, consider bringing forward those items to get the deduction this year if you anticipate lower income next year.  One other thing I urge you to do is to look into some of the tax breaks that were enacted as part of the stimulus act that passed earlier this year.  There may still be time to take advantage of these provisions. 

Perhaps this is the year to consider having your 1040 prepared by a CPA firm.  The amount it costs to have your tax return prepared professionally may well be offset by deductions and credits unknown to you.  Take the opportunity now to save on your future tax bill.  Do it today!

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Written by pacelinebiz

November 16, 2009 at 8:22 pm

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