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Scottsdale, AZ 85254
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November, 2003 Tax Tip

2003 Year-End Tax Planning


Favorable changes resulting from the 2003 tax law have made year-end planning this year more important than ever before.*  As the average family of four pays more in combined taxes than it does for food, clothing, and shelter combined, it goes without saying that tax reduction through proper and timely planning is vital to any family’s budget. What you do between now and the end of the year can, and very likely will, affect the tax burden or refund that you will face next April.  You must know what to do at the proper time to be able to take full advantage of the tax savings opportunities in the current law.  Tax planning at this time is particularly critical because, once 2003 is over, there are virtually no opportunities to minimize taxes for the year.

Tax planning is simply arranging your tax-related transactions in order to either permanently escape tax, defer the payment of tax for one or more years, and/or ultimately pay the tax at a lower rate.

Proper planning involves an analysis of each taxpayer’s unique situation and provides recommendations for reducing taxes. This is done by taking into account what has occurred and can still occur in 2003 as well as reasonable projections of income and deductions for 2004 (and in some cases later years).  The objective is to reduce the combined tax burden for both years. If you put it off, you run the risk of missing out on many strategies that could considerably reduce your combined 2003 and 2004 taxes.

There are other good reasons for year-end planning.  By having a projection of your 2003 taxes, you will not be surprised when you get your returns.  It also allows you several months to plan for potential payments.  If you have withholdings from wages or other payments, it provides an opportunity to have additional tax withholdings in order to avoid penalties if you have underpaid your estimated tax.  Conversely, if you are making quarterly payments and find that you are overpaid for the year, you may
be able to cut back or eliminate your fourth quarter estimated tax payment that is due on January 15, 2004.  

Some of the more common year-end tax strategies deal with the proper year in which to take income and deductions, investment planning, business planning (including purchase of assets), and retirement planning.

There are also many non-tax factors that could influence your year-end planning.  Among these are a significant raise or bonus, a change in jobs, changes in the amounts of your business expenses or itemized deductions, birth of a child, a death in the family, or a change in your marital status.

Regrettably an alarming number of tax professionals do not offer this valuable service and their clients could, and very often do, pay a big price unnecessarily.

I would be most happy to review your tax situation and assist you in saving  tax dollars through effective year-end planning.



*  A discussion of the 2003 tax law can be accessed from the home page of my website, 



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