Taxes: Now Is the Time


This is the most important REASON tax column you will read this year. So…Do I have your attention? Then listen to this: now is the time to get your tax affairs in order for 1979. Not in December, not in January or when you have your taxes done—do it now.

Well, why is that? you want to know. Glad you asked. Everyone should be reading this in late October and November. This is a time when your tax/financial situation for the year is usually pretty clear. But much can be done in these last couple of months if you want to really save tax money. It's not the perfect time—better yet to start year-end tax planning around September—but it's still good.

Happily enough, this is also a time of the year when much of the tax industry is nervously sitting around drumming its collective fingers. The whirlwind begins in January and February. Right now they have time—plenty of time to talk and work with you.

As is constantly pointed out in tax literature, there's a considerable difference between a "tax planner/advisor/preparer" and a mere "tax preparer." The latter simply reports on the tax forms what has already happened over the previous year. The former is capable of actively planning and directing your year-end financial behavior so as to minimize—or eliminate—your upcoming tax liability. Needless to say, you want to sit down and talk with the more versatile type. Find one and get an appointment with him or her now.

How to do that, you ask? The best way, of course, is to already know a tax expert you respect and trust—or have a friend who knows someone. Not the case with most of us. Okay, start asking around. Who handles your friends' taxes? Are they involved in planning, as well as executing (heh, heh), tax forms? Are they open for consultation year-round? (No tax man worth his gold and silver shuts down entirely during the year.) In asking around, don't neglect your libertarian friends and contacts. They often know qualified professionals (of all types, I might add) with a healthy philosophical orientation. Patronize them.

If you have no luck in that way, start doing some walking through the yellow pages. Look under "tax consultants," "income tax preparation," "tax preparers," "attorneys—taxation," "accountants," etc. Pick out a likely collection and call them up for interviews. If you can, get in a few minutes of questions with them on the phone. If they sound good, go in and talk with them. Many will charge nothing for an initial interview—and those too busy to talk with you for a few minutes may also be too busy to spend the necessary time and personal commitment on your taxes.

As for what to look for, check how much experience they've had, whether they handle audits of their own work (and at how much extra cost), their educational background, their general attitude toward government and taxes (very important: the good tax fighters are very forthright in their commitment to their clients and the law as they see it—which may not be the same as the IRS sees it). Ask also about range of fees and year-end tax planning.

Find the individual you want to work with, then get together with him now. Once December 31st goes by, the chance is lost. Many hundreds of thousands of dollars—even millions—have been saved or undone by time limits or regulations involving one day.

What might the specialist tell you to do? Virtually anything, depending on your individual situation. Spend money. Save money. Call in debts, do your billing. Don't call in debts or do your billing. Buy something. Sell something. The possibilities are endless. However, one good rule of thumb is this: the more complex and extensive your financial gyrations were during the previous year, the more important year-end tax planning is going to be.

So, like I say, do it now. By working with your tax specialist at this time, you'll be saved from having to simply react to the tax laws when you file—you'll be using them to further your own best ends. And that can't be bad.

Oh yes, there's one other thing. As I've mentioned before, there is a simple tax credit on the Form 1040 for donations to political candidates. It's been working so handily for the Democrats and Republicans that they last year enthusiastically doubled the credit. Now, if you're filing a return alone, you can claim a maximum deduction of 50 percent of a $100 donation (or 50 percent of any lesser donation). If you're filing a joint return, you can claim a credit of 50 percent of $200 (or 50 percent of any lesser donations).

Of course, if you don't want to sign your money over to the "tax and spend" blokes, there are other political parties—like the Libertarian Party—that are starving for money. You can give a donation to a candidate's campaign directly, or you can give to a national, state, or local party committee. A cancelled check will normally serve just fine as proof.

Now is the time to do that too. So just ease that red-hot checkbook out of your pocket and get yourself a tax credit. If you're single, donate $100 for a $50 credit. If you'll be filing jointly, scrape up $200 for a $100 credit. Send that bad dude off. If you choose your party carefully, it'll be the best investment you've made all year. You could just about defeat the basic purpose of the law. Now ain't that just too bad?