Tax Time? Already?!

When do you start thinking about your taxes? April 10th? If that’s your answer stop reading and go back to carving your pumpkin with the kids or grandkids. I procured a humungous pumpkin this year and made a happy face on it. I always make a happy face on my pumpkin. Even if you say that you start thinking about your tax situation what you may consider early, (say, January), chances are it’s already too late for me, your tax professional, to make a difference in how much money you will ultimately send to Uncle Sam.

I have a strong interest in what your tax bill ends up being. Mostly that’s because you are paying me to make it as small as possible; partially because I enjoy making it as small as possible. Within the parameters of what the law will allow, of course, but you would be surprised at what the law will allow. So, my advice to you is to make at least one phone call to me, your tax professional, prior to December 31st, keeping in mind that I have hundreds of clients and will need some lead time to give your particular situation the precious time it deserves.

We are on the cusp of what we professionals are calling “tax-mageddon” or in lay terms the escalation of our collective tax liability and subsequent draining of our savings accounts: for those of us that still have savings accounts. It is the topic of discussion at lunch for us. We attend seminars. We pour over dozens of articles. We sweat. We lose sleep. So what is the cause of this “tax-mageddon”? Nothing!

By nothing I mean that Congress is doing nothing (at least so far) to stop the expiration of dozens of tax breaks that we have enjoyed for years. We have rolled along with the so-called Bush era tax cut extensions that have acted as stop-gap measures for tax laws designed to expire since their enactment. Dozens of these tax breaks expired at the end of 2011 and dozens more are scheduled to expire at the end of this year. Our (the tax professionals) hope is that many of the provisions will survive another “patch” by our esteemed representatives. Our hope is that this “patch” will extend some of those provisions back, retroactively to the beginning of 2012.

However, there is the din of an impending election and the fact that fiscal policy may go in two dramatically different directions depending on the outcome has stopped any forthcoming indication on whether and to what extent anything will happen in time to plan with what most of us professionals would consider optimal precision.

What can you do? Do some tax planning prior to December 31st. Call me (and by me I mean either me or any other friendly and very knowledgeable D’Arcangelo & Co., LLP tax professionals) and let’s talk. Let’s talk about your tax situation and let me help you understand how the changing laws will impact you. I may not be able to give you a “right” answer because I don’t know what the tax landscape will look like a mere two months from now; nobody does. But, if we can have a pointed discussion and I can understand what your situation is, what you are comfortable with, and how we think what may happen will impact that situation, we can make some decisions. It could be worth your time and save you money. There are very specific things you may be able to do to mitigate taxes in both 2012 and 2013 and forward depending on the nature and timing of the breaks that are expiring and your particular situation. There are also very specific things you may be able to do to save on your tax liability regardless of what happens in Congress and the elections.

I can’t help if you don’t call. I have too many horror stories to count that end with “I could have done this” and “I could have done that.” Most of these cases were quote, unquote, new clients that looked very nervous when I first met them and often despondent when we concluded our meeting. If I could aggregate all the tax dollars that were mailed to Washington due to this subsequently discovered lack of planning and take them home with me, I would have retired years ago, and at 45 I am young.

I will talk to you soon; or maybe we will cry together in April. I always keep tissues next to my desk. Contact me at 315-336-9220 or at jburnham@darcangelo-cny.com.

Article written by Jerome Burnham, CPA