The Emporia Gazette

May 27, 2012

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It’s not too late for last-minute tax tips that could help when it comes to 2007 income tax returns. There are several last-minute moves that will pay off in returns.

Local accountant Dan Robertson, of Agler & Gaeddert, 1225 W. Sixth Ave., said there are some things to remember before taking last-minute steps.

“ ... Remember that effective tax planning requires considering both this year and next year at least,” Robertson said. “Without a multi-year outlook, you can’t be sure maneuvers intended to save taxes on your 2007 return won’t backfire and cost additional money in the future.”

Robertson offered the following suggestions for maximizing 2007 returns:

Charitable donations

- Move charitable donations you would normally make in early 2008 to the end of 2007.

- If short on cash, charge the contribution to a credit card — it is deductible in the year charged, not when payment is made on card.

- There are stricter rules for charitable contributions. For 2007, you can’t deduct any cash contribution unless you retain either a bank record that supports the donation (such as a canceled check or credit card receipt) or a written statement from the charity. For cash donations of $250 or more, a bank record is not enough. A charity-provided statement that meets tax law standards must be provided. Donations of used clothing and household items cannot be claimed as deductions unless the items are in good used condition or better. This includes items such as furniture, furnishings and electronics. Photos and lists should be kept to prove condition of items.

Real-estate taxes

You can accelerate payments of your real estate taxes otherwise due in 2008.

If you own a cash-based business, you can accelerate payment of certain expenses such as office supplies, repairs and maintenance to 2007.

Going green

- The Nonbusiness Energy Property Credit is 10 percent of what is paid for qualified energy efficiency improvements such as insulation, windows, doors and certain energy efficient heat pumps, hot water heaters and boilers on principal residences. This credit generally is limited to a lifetime cap of $500. This credit won’t apply to purchases made after 2007.

- Hybrid Vehicle Credit — Call your accountant before going with this one. Davis said the IRS is constantly updating the list of vehicles that qualify for tax credits.

Robertson said through careful planning, 2007 tax liability can be significantly reduced.

“But don’t delay,” he said. “The longer you wait, the less likely it is that you’ll be able to achieve a meaningful reduction.”

Jon Pool, a CPA with Pool & Wright, also offered some tips:

- Make donations to qualified charities if you already itemize deductions. Donation of appreciated stock provides a larger benefit because you don’t have to recognize the gain in the stock when you donate it. People over 70 years old can donate money directly to a charity out of their IRA accounts.

- Recognize losses in stock.

- Consider buying glasses, hearing aid batteries, renewing prescriptions and other medical expenses if you are going to be able to deduct your medical expenses this year.

- Pool suggested checking out rules on the “Kiddie Tax” on students under 24 years old. If someone has children with unearned income in excess of $1,700 there will be income tax issues.