If you're dreading tax season, take heart. There are still a few weeks left to make decisions that could lighten your tax load for 2008. Small-business accountant Teresa Hinton reveals a few key provisions:
- Equipment deduction: If you've been considering a major equipment purchase for your business, this is the year to do it. The first-year write-off ceiling for equipment expenses doubles for '08 to $250,000. To qualify, the equipment must be new and the deduction can't make your business show a loss.
- Bonus depreciation: If you have additional new-equipment expenses beyond $250,000, for this year only, you can deduct 50 percent of the remaining expenses in the first year.
- Estate tax: The estate-tax exclusion is only $2 million this year, but in '09 it rises to $3.5 million. Then, in 2010, the estate-tax rate will be zero. The best option: If you have substantial assets, continue gifting heirs with up to $12,000 apiece annually, tax-free, to reduce the size of your estate.
- Alternative minimum tax: This steep tax, originally aimed at the very wealthy, is increasingly ensnaring upper-middle-income families. Congress is expected to pass a last-minute renewal of last year's AMT fix, which excluded $87,500 in adjusted gross income for a married couple filing jointly. If not, watch out--that figure will plummet to $45,000. People with incomes exceeding $100,000 with substantial personal deductions, such as child care, are at particular risk of getting caught in the AMT trap.