Ringing up your Taxes…Before you Ring in the New Year

Ringing up your Taxes…Before you Ring in the New Year

Welcome to the official blog of Brittany Lanphier, managing partner of Lanphier Accounting LLP based in Denver, Colorado!

Any tax guidance in this blog is intended for informational purposes only and is not guidance on which Lanphier Accounting LLP intends for you to rely. All tax issues specific to your business or family are largely facts-and-circumstances based and you should consult your tax advisor (or Brittany directly) to discuss how this might relate to you.

November 15, 2010

Life…

Well, the blog has had to take an extended hiatus over the past few months.  Not only have the last few months been action-packed for our practice, barely allowing a moment’s rest for breath, but Dennis and I are excited to share that we are expecting a new addition to our family next year!  Between first trimester morning sickness and general fatigue, I have had to scale back my usual “100-mile-per-hour, 24 hours-a-day” work schedule and focus my energy on serving my clients.  As a result, the blog has sadly suffered.

Dennis and I couldn’t be more thrilled about our little Lanphier on the way, but we do assure all of our current and future clients that their needs will continue to be met by both of us, without interruption, as we move into parenthood.

As indicated above, the summer and fall have been a whirlwind for our practice, and we have been so pleased with the growth we have experienced in 2010.  As we move into the holiday season, we are so thankful as we reflect on all of the relationships we have developed with clients and business contacts all throughout the Denver area this year.  We can’t wait to see what 2011 will bring as well!

Taxes…

As we near the end of another tax year, I thought I would take a few moments to provide a few tax tips to consider before you ring in the New Year.   

1) Revisit your business income and deductions

Before the year closes, it is a good idea to take a look at the income you have earned, the expenses you have incurred, and of course, any taxes you have paid during the current year.  You may find that you have earned more income that you projected (good for you!), and therefore may wind up with a higher tax liability than anticipated.  The fourth estimated tax payment for 2010 is due on January 15, 2011, so you will want to have a handle on this shortly after the end of the year anyways.

Making this assessment will also give you the opportunity to sneak in any last minute deductions before the clock strikes midnight on December 31st.   Every little bit helps, so stock up on office supplies, renew insurance policies, and anything else that you can afford to reduce your 2010 tax liability.

2) Review your Portfolio

Now is a great time to meet with your financial adviser to discuss your financial portfolio.  As of New Year’s Day, capital gains rates will increase from 15% to 20% for most taxpayers.  If there were securities you considered selling soon anyways, December would be a great time to do that to ensure a lower tax rate on your capital gains.

Generally, it is also good advice to avoid buying a managed mutual fund right before the end of the year as well.  You may end up picking up capital gains, when you only owned the fund for a few weeks during the year.

Of course, there are more things to consider than just taxes when it comes to your portfolio, but it is definitely worth considering before it is too late.  Consult your financial professional now!

3) Maximize medical expenses covered your flex-spending plan

If you have been putting aside pre-tax earnings into a flex-spending plan, now is the time to schedule doctor’s and dentist’s appointments to use up those funds before you lose them. Doctors’ schedules fill up pretty fast this time of year, so call today to make sure they can fit you in.

Remember that flex-spending accounts not only can be used to cover for co-payments, deductibles, and coinsurance with your doctors, but also basic medical supplies such as over-the-counter drugs and first aid supplies.  Now is the time to stock up for your family!

4) Prepay tax deductible items early is possible

If you are able, it is always a good idea to prepay tax deductible items before year-end so you can take advantage of their tax benefits as soon as possible.

Consider making an early payment on your state estimated taxes for the fourth quarter or prepaying your January mortgage at the end of December.  This will enable you to absorb the tax benefits of these payments within a few months, rather than waiting until spring of 2012 when you file your 2011 return.

5) Make Charitable Contributions

This is a fairly common recommendation, but it bears emphasizing here.  Not only do charitable contributions reduce your tax liability (assuming you are itemizing your deductions), but there is no better time to help out the many worthy charities out there than the holiday season!

If you need any inspiration, the Denver Rescue Mission is a fantastic organization in Denver that provides assistance and meals to homeless families all throughout the year, but they need even more support over the holidays.

Another local organization that Dennis and I love is Save Our Youth, an mentoring program for at-risk youth in our community.  Dennis has been a mentor with this organization for several years, and they can always use contributions to assist with their programs.  An extra bonus for you is that up to 50% of your contribution is eligible for the Colorado Child Care Contributions Credit, providing you a dollar-for-dollar reduction in your state tax liability for Colorado residents.   For instance, if you donated $300, you could receive a $150 direct credit to offset your state tax liability.

If you’re thinking a little more globally, my absolute favorite organization is Compassion International, an organization that provides education, food, and clothing to thousands of kids in the world’s most impoverished countries.  Consider giving to their children’s holiday fund or to the Haitian relief fund this holiday season, or give year-round by signing up to sponsor a child in need.

And of course, there is no time like the present to clean out the closet and take a few bags of stuff down to Goodwill or the Salvation Army…again every little big helps with your tax liability next April!
Wrapping Up…

I hope all of you are able to take some time to reflect back on your 2010 over the next six weeks, whether it was full of joy and blessings or trial and struggles (or a mixture of both).   Despite the economy and all the uncertainty our country has been dealing with this year, I hope you are able to look ahead with hope, faith, and confidence.

Of course, if you have any questions about preparing for the end of the year from a tax perspective, we would be happy to help you.  Call our office to set up a consultation!

Best holiday wishes to all!

Brittany


Brittany Lanphier | 11/15/2010

Lanphier Accounting LLP
600 17th St., Suite 2800 South
Denver, CO 80202

Phone: 720.961.0310
info@LanphierCPA.com