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Tax Planning for the 
Planning Impaired 

Another tax season hits the record books. And you are breathing a sigh of relief and saying, "Wow, I am glad that's over. I don't want to think about taxes again until next year." Well, have I got news for you! This is the very time to START thinking about taxes.

For example, did you get a big refund last year from Uncle Sam? Before you pat yourself on the back for your thrift, remember that you lost the use of your money and gave the government an interest free loan. Wasn't that nice of you? So unless you like not having the use of your own money, adjust your withholding with your employer. More money in your pocket every month versus a big chunk at the end of the year? No brainer.

Okay, so you weren't one of those lucky ones who got a refund. You got caught short and owed a bunch of money. Adjust that withholding from your paycheck or make estimated tax payments. Doing this will help you avoid a penalty for not paying in enough. Yes, Virginia, the government charges you a penalty for not paying in enough money during the year. Are you surprised?

How about IRAs and other retirement plan contributions? For some reason, people always like to wait until the very last minute to put their money into their IRAs. But the sooner you contribute the sooner it starts to grow away from the sticky fingers of the tax man.

Are you a small business practicing as a sole proprietorship? It might be worth looking into becoming a corporation. The sooner you do this the sooner you can reap the benefits. And the more flexibility you can have with reducing your tax liability.

If you are charitably minded, don't wait until year-end to give to your favorite charity. Many tax-exempt organizations are hurting for funds this time of year. Give them a break. If you want to maximize your deduction and put the screws to Uncle Sam, here's a nifty idea. If you have stock or other assets that have appreciated in value, consider donating them instead of cash. The organization can sell the stock and get the money, while you get a tax deduction for the fair market value of the stock. Uncle Sam gets the big zilch, zippo, nada, nothing. Gives you a warm feeling, doesn't it? (One catch: in order to get the deduction, you have to have held the asset more than 1 year).

Getting the urge to start a home business? There are still lots of benefits to doing just that, but be careful about taking the deduction for business use of your home. Congress just changed the law liberalizing who can take the deduction, but then (due to the law of untended consequences), they hamstrung us by taking away your ability to exclude 100% of the gain on sale of your home when you sell it. It's complicated. If this applies to you, seek out professional help. DO NOT TRY THIS AT HOME.

Speaking of homes, summer is almost upon us and the time is ripe for people to buy and sell houses. Good news. If you are married and have lived in your home for at least two years, you can sell it for up to a $ 500,000 profit and not pay any tax. You don't have to buy a new one or anything. If you are single, the same rules apply but you're only allowed a $ 250,000 profit.

If you are buying a house, be sure and give your tax preparer a copy of the settlement sheet from the purchase. There may be points, or other important items on there to help you come tax time.

The best advice I can give you is to remember how you searched high and low for that missing receipt and pulled your hair out trying to organize your records at the last minute. Well, resolve to start now. Get a good filing system or invest in a good computer program to help you track your income and expenses. Even if (or especially if) you use a tax pro to do your taxes, the better you are organized, the less it costs and the less time it takes. I for one tell clients who dump a shoebox full of receipts on me during busy season to leave me a blank check and I will fill in the amount.

For all of you who brought your taxes in early and well organized this year, I extend my appreciation for tax preparers everywhere. And even though tax season is over, it's still okay to send cookies or other goodies to your tax pro just to let them know you haven't forgotten all their hard work. Well, it's time to close this off for this month. Remember, good tax results start with tax planning.