Holiday spending with the tax collector in mind can bolster your 2007 tax deductions by speeding up some outlays planned for early next year.
1) Self-employed people can do last-minute shopping for office supplies and equipment. Those expenses lower net income from your business and thus trim both income tax and the payment of self-employment Social Security tax.
2) Consider accelerating gifts to charities, job-related expenditures, medical outlays, and other deductible items.
3) People who make estimated tax payments can hurry next month's final payment of estimated state income tax for 2007. If you wait to pay in January, the tax is deductible on 2008's federal return. Paying it this month makes it deductible on 2007's federal return. (Potential victims of the alternative minimum tax may not get a benefit by advancing payment.)
4) It's also possible to move up a mortgage payment due early next month to bolster 2007's deduction for interest. But keep track of the payment since the year-end statement you get from the mortgage lender may not reflect it.
5) Delaying income? The flip side of accelerating deductions is to delay income so it falls into next year and reduces 2007 tax.
6) Self-employed people may be able to delay some billing. Employees may be able to defer receipt of a bonus. Investors may be able to time the receipt of income and gains. Warning. You can't just put a check in the drawer. "If you have received a check and you have control over it, it is considered income whether you cash it or not," cautions BDO Seidman accountant Ed Smith.
