There are still few weeks left before the end of 2011 and there is so much to do! Shop, decorate, celebrate, spend time with family and friends just to name a few.  Do you happen to have Year End Tax planning on your checklist?  You may want to include some of these tax tips as you prepare for the New Year.
*Early in December, check the amount of 2011 tax you have prepaid through withholding and quarterly estimates. If you’ve underpaid, consider increasing your withholding before year-end. Withholding is considered to have been paid evenly throughout the year. This could prevent being charged underpayment penalties for 2011.
* Avoid the marriage penalty. If a wedding or divorce is in your plans, be aware that your marital status as of December 31 determines your tax status for the whole year. Changing the dates of a year-end event may save taxes. Even though recent tax laws provided some relief from the marriage penalty, they did not eliminate it.
* Plan for losses. Check your basis in any S corporation in which you are a shareholder and where you expect a loss this year. Be sure you have sufficient basis to enable you to take the loss on your tax return.
* Use this year’s annual gift tax exclusion. If you make annual gifts to family members or others, make sure you complete your gifts for 2011 by December 31.
* Squeeze in planned equipment purchases before December 31. Taxpayers must usually deduct the cost of business property over several years. A special election allows taxpayers to expense up to $500,000 of new and used property purchased and put into service in 2011. Also, check into the 100% bonus depreciation allowance for new equipment purchases.  Property such as machinery, equipment, and furnishings qualify. Be careful with special rules that apply to automobiles and personal computers.
If you have questions about year end tax planning, please call Simons Bitzer at (317) 782-3070 and schedule a time to consult with one of our tax specialists.