Last week we looked at some of the areas you should be considering for tax savings as we get into the second half of the 1983 tax year. Here are some more suggestions for review.
Plan your gifts to charitable organizations to get the best tax break. If you expect to be in a different tax bracket in 1984 than in 1983, the timing on charitable gifts could be significant.
The objective is to get the deduction in the year in which you get the larger tax savings. If you expect to retire around the end of the year, so that your income will drop in 1984, make all the deductible gifts you can afford this year when you get a more valuable deduction.
Follow the opposite strategy, of course, if you expect your income to jump--perhaps because of an anticipated raise or because your presently nonworking spouse will be employed next year.
If you own securities that have increased in value, you might consider giving the securities instead of cash. You may claim the deduction for the market value on the date of the gift, but with no liability for reporting the gain.
You may want to take a look at the whole area of Schedule A deductions. Make a rough tally of deductible items so far, plus an estimate for the rest of the year. If it looks like the total will not exceed the zero bracket amount for your filing status, postpone whatever you can until next year, when you might have enough to itemize.
Go through the same kind of exercise for all dependents you plan on claiming for 1983. Except for children under 18 or full-time students, you will lose the exemption if the dependent earns more than $1,000.
And for all dependents, regardless of age, you must provide more than half the support. If it looks like your exemption for any dependent might be in jeopardy, make some adjustments while there is still time to save it.
Are you planning on selling your home any time soon? If you're coming up on age 55, it might pay to wait, so you can take advantage of the one-time exclusion of up to $125,000 in capital gain on the sale of your personal residence.
If you're an active investor, timing can make a substantial difference in your tax bill. If you sell a security in a year or less after purchase, the entire capital gain will be taxed. But only 40 percent of the gain on an asset held more than a year will be subject to tax.
Conversely, you should generally try to take losses short-term to recoup as much as possible of the loss in the form of tax savings. Tax liability should not be primary in planning tax strategy, but should certainly be considered.
These ideas, together with the ones we discussed last week, ought to give you enough to think about for now. Remember: If you have questions, about these ideas or any other area that we didn't cover, write to me at The Washington Post and I'll try to resolve your problem for you.
Reminder: If you filed Form 4868 last April for a four-month extension of the deadline for filing your tax return, today's the day. That four-month grace period ends on Aug. 15--so if you haven't yet gotten around to completing your return, you have about a few hours left.
Since April 1982, federal credit unions have been free to pay any rate they choose on certificates of deposit. Now the Depository Institution Deregulatory Commission has decided to extend that freedom to banks and savings and loans as well.
Effective Oct. 1, all federal ceilings on certificates of deposit will be lifted. At that point, banks and S&Ls will only have federal limits on passbook savings and regular NOW accounts.
On the same date, the present rules establishing minimum deposit amounts will be lifted (except on 31-day accounts), and the savings institutions will be free to set their own minimums. And the required minimum penalties on early withdrawals will be relaxed, too, for certificates purchased on or after Oct. 1.