KPMG Offers Tax-Saving Tips for Year-End | AccountingWEB

KPMG Offers Tax-Saving Tips for Year-End

KPMG's Personal Financial Planning unit has compiled a list of 12 tax-saving tips that individuals can use between now and December 31st to reduce their 2002 tax bills. Here are the tips in brief:

  1. Review your stock portfolio and consider using capital losses to offset capital gains. Keep in mind that a net capital loss of up to $3,000 can offset ordinary income.
  2. If you have stocks that decreased in value this year, consider donating the proceeds of the loss to charity. This way, you can claim a capital loss and a charitable contribution.
  3. Take advantage of the new contribution limits for both traditional IRAs and Roth IRAs. If you're 50 or older, you can use new "catch-up" provisions.
  4. Consider making contributions to a 529 college-investment plan or a Coverdell education savings account.
  5. If you're financially able, consider establishing a gift-giving program for children and grandchildren to take advantage of the tax-exclusion increase.
  6. Rethink your charitable contributions. Confer with your tax professional to determine if the contribution should be made in property or cash.
  7. If you have self-employment income, start a Keogh plan by December 31, 2002.
  8. Enroll in an employer-sponsored dependent care program and/or a medical expense reimbursement plan.
  9. Learn about how the Alternative Minimum Tax (AMT) will affect more taxpayers beginning this year. Be especially sensitive to the AMT if you live in a high-tax state.
  10. Pay the final installment of state-estimated tax by December 31, 2002 to receive a deduction for this year, rather than 2003. But be aware of possible AMT ramifications.
  11. Accelerate deductions into this year by prepaying some of next year's deductible expenses, and defer income, where possible, until next year.
  12. If you are one of the many individuals who experienced a job loss in 2002, tally up all job-search-related expenses. You may be eligible for a deduction if your expenses exceed 2 percent of your adjusted gross income.
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