ANCHOR: THERE ARE ABOUT NINE WEEKS TO GO IN THE YEAR. SO FORGET ABOUT CHRISTMAS! IT’S TIME TO FIGURE OUT WHAT THE HECK YOU’RE GOING TO DO ABOUT NEXT APRIL 15TH.

ANCHOR: WGN’S MONEY SAVING EXPERT ILYCE GLINK IS HERE WITH A FEW SIMPLE THINGS YOU CAN DO TO LOWER NEXT YEAR’S TAX BILL.

ILYCE: GOOD MORNING. UNLESS YOU’RE DRESSING UP AS AN I-R-S OFFICER FOR HALLOWEEN NEXT WEEK, YOU PROBABLY HAVEN’T THOUGHT MUCH ABOUT TAXES. THAT’S UNDERSTANDABLE, BUT NOW’S THE TIME TO MAKE SURE YOU’RE ON TRACK FOR PAYING THE RIGHT AMOUNT OF TAX NEXT APRIL 15TH AND, IF POSSIBLE, LOWERING NEXT YEAR’S TAX BILL. LET’S TAKE A LOOK AT A FEW THINGS THAT MIGHT MAKE A DIFFERENCE. TAX-SMART INVESTING

  • TAKE CARE IF SWITCHING TO DIVIDEND-PAYING STOCKS.

  • TIME SALE OF MUTUAL FUNDS

  • PAY INCOME TAX AND CAPITAL GAINS TAX

ILYCE: LAST WEEK I TALKED ABOUT HOW MANY PROFESSIONAL MONEY MANAGERS ARE RECOMMENDING DIVIDEND-PAYING STOCKS INSTEAD OF BONDS. IF YOU’RE CONSIDERING SWITCHING TO DIVIDEND-PAYING STOCKS, BE CAREFUL. YOU MAY HAVE TO PAY INCOME AND CAPITAL GAINS TAXES ON THE BONDS. YOU SHOULD ALSO CAREFULLY TIME THE SALE OF MUTUAL FUNDS. IF YOU SELL TOO LATE IN THE YEAR, YOU COULD WIND UP PAYING INCOME TAX ON THE DISTRIBUTION AND CAPITAL GAINS TAX ON THE APPRECIATION MOST MUTUAL FUNDS HAVE SEEN THIS YEAR.

ILYCE: IF YOU HAVE TEENAGERS, SPECIFICALLY, A CHILD WHO IS 14 YEARS OR OLDER, YOU MIGHT THINK ABOUT GIVING THEM STOCKS OR BONDS THAT YOU HAVE HELD AT LEAST ONE YEAR. KIDDIE TAX RULES

  • GIVE UP TO $11,000/$22,000

  • NO GIFT TAX

  • 14 + TAXED AT OWN RATE

  • 15% BRACKET – PAY 5 % TAX

  • PAY 0% IN 2008

ILYCE: ACCORDING TO THE KIDDIE TAX, YOU CAN GIVE A TEENAGER UP TO $11,000 PER PERSON, OR $22,000 IF YOU’RE MARRIED WITHOUT TRIGGERING THE GIFT TAX. KIDS 14 AND UP PAY TAX AT THEIR OWN TAX RATE. IF THEY’RE IN THE 15% BRACKET, THEY PAY JUST 5% TAX BUT EVEN THAT’S GOING AWAY. THEY’LL PAY NOTHING STARTING IN 2008, UNLESS CURRENT TAX LAW CHANGES.

ILYCE: AN EASY TAX MOVE YOU CAN MAKE IS TO FIND OUT IF YOU’RE ON TARGET WITH HOW MUCH TAX YOU’VE ALREADY PAID THIS YEAR.

CHECK WITHHOLDING

  • INCREASE OR DECREASE WITHHOLDING

  • JOBLESS BENEFITS ARE TAXABLE.

    ILYCE: CHECK YOUR PAY STUB TO SEE IF THE AMOUNT OF TAX THAT HAS BEEN WITHHELD IS ACCURATE BASED ON YOUR TAX RATE. YOU CAN INCREASE OR DECREASE YOUR WITHHOLDINGS DEPENDING ON WHETHER YOU’VE WITHHELD TOO MUCH OR TOO LITTLE. IF YOU’VE BEEN OUT OF WORK FOR PART OF THIS YEAR, DON’T FORGET THAT JOBLESS BENEFITS ARE TAXABLE. FINALLY, YOU DON’T HAVE TO WAIT FOR CHRISTMAS TO REMEMBER THOSE LESS FORTUNATE THAN YOURSELF. SOME WELL-TIMED DEDUCTIONS MAY HELP PUSH YOU OVER THE THRESHOLD FOR THE STANDARD DEDUCTION AND CAN SAVE YOU CASH NEXT APRIL.

    DEDUCTIONS COUNT!

  • DONATE FURNITURE, BOOKS, CLOTHES, HOUSEWARE ITEMS

  • LETTER/RECEIPT FOR CASH GIFTS $150 +

  • ITSDEDUCTIBLE.COM

  • IRS.GOV

    ILYCE: THE IRS PERMITS YOU TO DONATE FURNITURE, BOOKS, CLOTHES, HOUSEWARE ITEMS AND ANYTHING ELSE YOU CAN THINK OF. BUT REMEMBER, THE IRS LIKES PAPERWORK, SO BE SURE TO GET A RECEIPT OR A LETTER FOR CASH GIFTS OVER $150. IF YOU’RE HAVING TROUBLE ESTABLISHING A VALUE FOR YOUR DONATIONS, TRY A SOFTWARE PROGRAM LIKE IT’S DEDUCTIBLE.COM. AND YOU CAN ALWAYS GO TO THE I-R-S’S OWN WEBSITE FOR INFORMATION ON WHAT’S DEDUCTIBLE. THAT WEBSITE IS IRS.GOV.

    ILYCE: FOR MORE HELPFUL TIPS AND WAYS TO SAVE MONEY, LOG ONTO WGNTV.COM/GLINK OR MY OWN WEBSITE, THINKGLINK.COM.

LARRY AND ROSEANNE

RESOURCES:

WWW.ITSDEDUCTIBLE.COM

WWW.IRS.GOV

Published: Oct 21, 2003