Although summer is officially right around the corner, there’s no vacation from tax planning. If you’re dedicated, you’ll be able to bask in tax savings as the weather heats up. Here are seven prime examples:
1. Cut back quarterly small biz payments. Self-employed taxpayers must pay income tax in quarterly installments to avoid an “estimated tax” interest rate penalty. The next installment is due June 15.
Normally, no penalty will be assessed if your annual payments equal at least 90% of your current year tax liability or 100% of last year’s liability (110% if your AGI for the prior year exceeded $150,000). But the new economic stimulus law (the American Recovery and Reinvestment Act of 2009) cuts you more slack.
If your AGI is less than $500,000 and more than 50% of last year’s income came from small business activities, you can base this year’s payments on 90% of your 2008 tax liability instead of the usual 100%...(register to read more)