2003 ends at midnight Wednesday, and as far as we can tell, extensions are unavailable. What's a procrastinator to do?
TAX MOVES THAT ARE PROBABLY WISE
-Pay your last-minute deductions with checks mailed by December 31 or by credit card charges incurred before January 1 (even if the credit card bill is paid later). For the generous procrastinator, a number of worthy charities will take online contributions via credit card, including the Salvation Army and the USO.
-If you have a business, remember that amounts accrued to related parties must be paid by December 31 to be deductible this year (unless both you and the related party are on the accrual method).
-If you have a money-losing S corporation, be sure you have enough basis to deduct your losses.
-Pay your next mortgage payment by December 31 so you can deduct your interest.
-If you will be paying for a child's college education, make a contribution for the child to a College Savings Iowa account or another Section 529 plan by year-end. College Savings Iowa contributions made by year-end are deductible on your Iowa return up to $2,230 per donee, per child.
-If you have an estate likely to be large enough to be subject to estate tax, make your $11,000 per donee gifts before Thursday. If you don't use this year's annual gift exclusion, it's lost forever. Don't count on the mail for this - get the goods to the happy donees before you toast the new year.
TAX MOVES THAT MAY OR MAY NOT BE WISE
-If you expect to owe state income taxes and you're pretty sure you won't incur Alternative Minimum Tax (AMT) for 2003, you may want to mail an estimated state tax payment by December 31.
-If AMT is unlikely, consider paying your March property tax bill by December 31 so you can deduct it.
-Remember - if you have income over $125,000, or if you have three or more children, or large capital gains, it is unwise to assume that you won't have AMT for 2003 unless you have run some numbers to make sure.
TAX MOVES THAT AREN'T WORTH MAKING JUST FOR TAXES
-If you become a parent before the ball drops on New Years Eve (local time), you will have a dependent exemption for the entire year. Good luck convincing Mom to hurry it up, though; and if she finds out that the deduction is useless anyway because of AMT, she might be really irate.
-Your marital status on December 31 is your marital status for the entire year, as far as the tax law is concerned. Some folks are better off (for taxes) married; some aren't. If your marriage decision hinges on the tax consequences, you probably should be visiting another website.
A GOOD TAX MOVE WE HOPE YOU WOULD MAKE ANYWAY
-Survive. The lifetime exemption for the Estate Tax increases to $1,500,000, from the current $1,000,000, for those dying after December 31. Unfortunately, the gift tax exemption will remain at $1,000,000 after 2003.
So hang in there, and have a great 2004.
The items included in the Tax Update Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation.
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to