Time is running out for 2003 tax planning

It's October and you only have three months left to do your 2003 tax planning. There is still time to make meaningful changes, but after December 31st, it is all over except recording what happened.

Do a mock-return, or part-year return, to estimate your 2003 tax liability. It may be lower than expected due to this year's tax cuts. Adjust your withholding if you find you'll be due a big refund. While the security of a refund is comforting, consider putting some of those dollars to immediate use. You may want to adjust your fourth quarter estimated tax payment if you're self-employed.

If you didn't receive an advance payment check for the new, higher, child tax credit, you'll be able to claim the credit when you file your return, provided you qualify.

Maximize your retirement contributions. You may have more disposable dollars as a result of the tax cuts or if you refinanced your home mortgage. Allowable contributions to 401(k) and SIMPLE plans increased this year. Don't overlook the catch-up contributions if you're age 50 or older.

Review your deductions. The standard deduction for married couples increased to $9,500 this year as part of marriage penalty relief. Some couples won't find it worthwhile to itemize, especially if they also reduced their mortgage interest by refinancing.

Review your investment strategy. This year's tax cuts included a drop in long-term capital gain rates. Try to meet the 12-month holding period to qualify for long-term treatment on any securities you plan to sell. Also factor the reduced tax rates on qualifying dividends into your planning.

Businesses should review capital spending plans to make full use of the new tax incentives like the higher Asset Expensing (Section 179), $100,000 limit. If your business qualifies, don't overlook the generous expensing provision passed this year.

We have been contacting the clients we helped with their 2002 returns this year, but if we haven’t called you yet, or for more assistance in identifying the best tax-cutting moves in your situation, contact our office after October 15th, the final tax filing deadline.

*Please visit our updated FAQ page for detailed
answers to some of our more commonly asked questions.