'Tis a taxing time of the year

Santa Claus has pulled out of town -- to make way for the tax man.

"Whazzat?" you say. "Don't we have four months until our taxes are due?"

Settle down. Yes, that IS true. But you should know the official filing season starts Jan. 5. And there are some last-minute things you could do to save money before Dec. 31.

That's where I come in. Well, to be accurate, that's where my friends at the Missouri Society of Certified Public Accountants come in, with a short list of things you OUGHT to be doing before you get to ignoring your resolutions.

Balance gains and losses. Tally investment winners and losers. Then, determine if it makes sense to take tax losses by selling poorly performing investments.

If losses exceed gains, taxpayers can deduct up to $3,000 in capital losses against other income ($1,500 for married couples filing separately). Losses in excess of $3,000 can be rolled into subsequent years.

Defer income. If you're self-employed or have outside income, consider deferring income into 2004 by delayed billing. This only makes sense if you expect to be in the same or lower tax bracket next year.

Maximize miscellaneous itemized deductions. Items such as tax preparation fees, job-hunting expenses and unreimbursed employee business expenses are deductible as miscellaneous itemized expenses.

Miscellaneous itemized deductions must exceed 2 percent of adjusted gross income. If you hit that mark, you should check into accelerating additional miscellaneous deductions into 2003.

Save on mortgage payments. If you itemize deductions, consider paying next month's mortgage payment by Wednesday to deduct the interest this year. Be sure the check arrives at the bank by year's end to have the payment reflected on Form 1098.

Make charitable contributions. Charitable contributions are tax deductible if you itemize. Be sure to obtain a receipt for donations in excess of $250.

Contribute the maximum to your retirement accounts. Some employers will let you catch up on your tax-deferred 401(k) retirement savings account if you haven't contributed the maximum amount. For 2003, you can contribute the maximum of $12,000 ($14,000 if you're over 50 by the end of the tax year). You may be able to open a traditional IRA and deduct the full $3,000.

Update flexible spending accounts. If you have a flexible spending account, be sure to use it to the fullest. If necessary, order extra contact lenses, schedule dental cleanings or stock up on prescription medications. You must exhaust the balance in the account by year's end. Any remaining amount will be forfeited.

Shift income. You and your spouse together can give up to $22,000 of assets free of federal gift tax to each of your children. For children 14 and older, all income is taxed at the child's marginal rate. For children under 14, the benefit is limited since unearned income beyond $1,500 is taxed at the parents' marginal rate.

If you're a teacher, stock up on supplies. Eligible educators during the school year may deduct up to $250 of qualified expenses for purchases of books and classroom supplies. Educators must work at least 900 hours per year. You don't have to itemize to claim this tax break. Be sure to save your receipts.

Organize your tax records. Organizing your tax records and paperwork early gives you time to request copies of any missing documents.

Sound confusing? Well, if your confusion continues into the new year, remember that my other good friends at the IRS will offer a series of tax tips during the federal filing season.

IRS Tax Tips will offer concise, useful information on topics affecting millions of taxpayers. These tips will cover topics from child credits and higher education benefits to Individual Retirement Accounts and Social Security issues.

The Tax Tips will be available at the IRS Web site at www.irs. gov on The Newsroom page. Look for a link to them under the Topics sidebar.

In the meantime, put your Christmas toys away, grab your calculator and get to work!

Scott Moyers is business editor of the Southeast Missourian.