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Show Now is the time to examine your year-end business taxes can count it as a deduction. If it is more than $500 you should get a receipt from them stating the value and you may need to file a special form with your tax return. The opposite can work just as well. If you are expecting some larger lar-ger income next year, you might want to save some of the deductions deduc-tions until next year as well. Or if you will have a lot of deductions this year, and you expect a lower income next year you might want to wait to pay for some deductible items until next year when there is the possibility of moving down into a lower tax bracket. There are some other changes that will take effect this year and need some special consideration in your year end tax planning. The amount for personal exemptions goes up to $1,950 for 1988 and will rise again next year to $2,000. The standard deduction takes a big jump this year to $3 ,000 for a single taxpayer and $5,000 for a married couple filing a joint tax return. If you are planning to liquidate or sell a small business corporation in the near future, you may want to complete the transaction before the end of the year. A delayed effective date for this provision of the 1986 Tax Reform Act will make gains from these sales taxable both to the corporation and to the shareholder share-holder after the first of the year. One option to consider in lowering lower-ing your taxes is to shift some of the income to other members of the family. For example, those education educa-tion and mission funds that you have for the children can be put in their names and social security numbers. You will need to watch out for the Kiddie Tax, though. If your children are under 14 years of age, any investment income over $1,000 will be taxed at your rates. So if their investment incomes are approaching that figure, ycA may want to switch them into some tax-free investments or some that are tax deferred until they will be over 14. The important threat in this patchwork of tax advice is to take the time and effort now to do your planning. That way there won't be the surprises next April, and you may find the cost to be a lot less. KENNETH J. ROSE Editor's Note: Bottom Line author Kenneth J. Rose is the owner of Rose and Associates, a small business tax consulting, con-sulting, and financial planning firm in Bountiful. I generally wait for my year end tax planning article till closer to the end of the year. But now is really the time to take a serious look at your taxes. It can give you an opportunity to adjust earnings or payments to maximize the benefit that you will receive. Planning now can be especially important because we are again faced with a congress that is talking about more changes to the tax laws . The uncertainty is whether or not they will be able to get a new law passed in time to issue forms and instructions for the coming tax year. In other words, since we don't know what the tax laws are going to be next year, a strategy to approach would be to maximize . the benefit this year. There are always some of the normal steps to take at the end of the year. Shift earnings, if possible into next year and pay deductible items this year. You might want to defer taking that bonus check or an extra commission check until after the end of the year, for example. Or, if you can prepay items like taxes, charitable contributions or other items this year instead of waiting till next year, you can take the deduction early. And don't forget charitable contributions of all of the junk that you want to clean out of a closet or garage. Instead of throwing it away, give it to a charitable organization. They need the donations and you |