Show #345 Airing Sunday, 6/18/06
It feels like we’ve just filed our taxes. Now it’s time to enjoy the sunshine, play golf, and visit with the kids or grandkids. Yet our next guest says that now is the time to take steps to beat the tax heat for next year. Who is this Grinch that wants to steal our summer vacation? It’s none other then Tony Mercuri from Ta-Check Tax Service.
Question: We've just finished our taxes and now you want us to do more tax planning?
<span class="QA">Answer: </span> That is correct. NOW is the time for tax planning. When you're filing your taxes in March or April, your money-saving choices are limited. Working on it now is the smart way of doing it.
Question: Can you give us an example of what can be done now to help you save on your taxes?
<span class="QA">Answer: </span> We've talked before about contributing to your IRA as a way to save taxes, and you do have until April 15th to do so. The reality, though, is that many don't want to-or can't-come up with $4,000-$9,000 (for a couple) at that time.
However, you can do this slowly throughout the year. Put away $200-$300/month and you'll have a better chance of succeeding.
Question: What else can be done?
<span class="QA">Answer: </span> Choose your investments appropriately. For example, Municipal Bond Funds are triple tax exempt. If you invest in these funds now rather than in CDs or stocks, you can lower your taxable interest and dividends all throughout the year.
Also, review your investments NOW. Perhaps you should make some changes or take advantage of any losses you may have.
Recently I've spoken about both tax shelters and tax credits. These may be another good option.
All of these things need to be done now to have the desired effect.
Question: What about people who are retired and need income? Any planning that can help?
<span class="QA">Answer: </span> We work with a lot of folks on income planning. The biggest issue is making sure that you take your income from the right places. For example, instead of taking money from an IRA or an annuity (which are taxed at income tax levels), perhaps you could take income from investments that are taxed at capital gains levels (equaling less income tax). In other words, instead of reinvesting capital gains, they can be taken as income.
Many people pull money from IRAs and reinvest their CD interest. Instead, they should do the opposite. CD interest is taxable to you whether you take it or reinvest it; therefore, by taking your income from the IRA, you are paying taxes on two incomes. If you reinvested the IRA and took the CD interest, you would only be paying tax on one source of income.
Question: What about people who own rental properties or small businesses? Any special planning for them?
<span class="QA">Answer: </span> You can do what we call income shifting: pay wages to a child or a parent who is in a lower tax bracket than you.
Gifting income producing property or investments can make a big difference.
We have several seminars coming up where we discuss some of these strategies. Viewers can call for dates and times.
Question: How can our viewers learn more?
<span class="QA">Answer: </span> We have several seminars coming up where we discuss some of these strategies. Viewers can call for dates and times.
While you slather on the sunscreen, why not "screen" your investments too, so you can save on your taxes next April. For more hot tips on cool tax savings, and for information on their upcoming seminars, give Ta-Check a call. The number's next. My thanks to Tony Meruri.
