AKM 2007-2008 Tax Planning Guide

Year-round strategies to make the tax laws work for you.

The saving is in the details

The turn of the year is a wonderful time for renewal, for reflection and for spending time with those you care about. It’s also the time when you should start considering your tax strategy for the coming year. We recognize that taxes are probably the last thing you want to think about, particularly with so much else going on in your busy life. But a little planning now can reduce your tax bill later — sometimes by a lot.
This publication covers the broad strokes of changes in tax law and the issues that might be of concern to you, your family and your business. We invite you to read through the portions that interest you or that relate to any transitions your family is likely to experience in the next few years. Flag anything that piques your interest or raises questions; your AKM CPA will be glad to review it with you.
We’ll continue to advise you of specific changes in the laws, the challenges they pose and the opportunities they offer, through our monthly Bulletins. In the meantime a quick perusal of this book, which we have carefully reviewed for relevance
and accuracy at the time of publication, should help you prepare to face the upcoming tax year strategically.

Please contact us if you’d like to discuss any of this material — or any otherfinancial matter. We’re always here for you.
With best regards,

Team AKMCPA

Contents and Excerpts –

Tax law changes [Page 2] – 2006 was a banner year for new tax laws: Congress passed and the President signed three major tax bills. The new laws affect everything from investing, college funding and retirement planning to charitable giving, health care savings and the alternative minimum tax (AMT). And in May 2007, he signed the Small Business
and Work Opportunity Tax Act of 2007 (SBWOTA), which helps small businesses offset increased expenses due to the minimum wage hike but also raises taxes in certain situations. Now, the question on everyone’s mind is: Are they done yet? Nobody knows.

Our tax system [Page 4] – It’s an annual rite for most Americans: Figuring out all the ways to keep our tax bills as low as possible. Knowing how our tax system works will equip you to understand which hoops you need to jump through and which loopholes you can take advantage of to save the most tax over the long haul.

Income [Page 8] -Typical tax planning goals are to have income favorably “characterized” and to defer or escape taxation on it. This can change, or even reverse, however, depending on your situation in any given year. And some forms of compensation are subject to special rules. That’s why it’s so critical to understand how our tax law regards different types of income.

Deductions [Page 12] – Finding items to deduct each year can be challenging but fun, if you know where to look. Our tax law has many hidden gems just waiting to be discovered. While many are geared to taxpayers of moderate-income levels, even higher-income earners can find deductions that will save them a pretty penny. And charitable giving offers both tax savings and nonfinancial rewards.

Gains and losses [Page 18] – While it’s generally not a good idea to try to time the market when making investment decisions, timing can have a major impact on the tax consequences of those decisions: Determining the best investments to sell before year end can maximize your tax savings. Methods are also available for deferring gains when selling
certain kinds of assets.

Education [Page 22] – When planning for education needs, don’t limit your focus to college. The educational tax breaks available start as early as elementary school and go through postgraduate education. So take advantage of the many options that can help you ensure the road to your children’s — or grandchildren’s — education is paved with tax benefits.

Retirement planning [Page 25] – Nowadays, people approaching retirement aren’t thinking about idyllic days spent in a rocking chair, but rather about doing all the things they haven’t been able to do as part of their fast-paced business life. If you’re one of those who can’t wait to meet the world head-on in retirement, you need a plan that will help you financially so you can accomplish all your retirement goals.

Estate planning [Page 29] – Whether you inherited your wealth from past generations or have worked hard to build it for yourself and future generations, you need to plan for how it’s eventually distributed. Today, there are many options for distributing wealth according to your wishes while minimizing taxes.

Click here to download AKM Tax Guide 2007-2008 [pdf]

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