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End of Year Tax Planning

The end of the year is quickly approaching. What can you do to make 2002 a Happy New Year? Ease your tax burden? Lighten your load?

With a few simple steps you, too, can avoid sticker shock come April 15th. Here's how:

1. Shift income: Compare your 2001 income with your estimated earnings for 2002. Consult a tax table. If this year's income puts you in a higher bracket, shift some of your earnings to 2002. No, shift all of your earnings to 2002. The IRS will owe you enough to pay off your dirty accountant and buy you a one-way ticket to a country whose government is so crooked it will never extradite you for tax fraud.

2. Increase withholdings: The more withholdings you claim, the more you own. It's your money.

3. Eliminate 401(k) contributions: And keep the cash. You'll need it. The same goes for IRA contributions and any excess. Do not waste time with short-term CD's or Treasury Bills that will mature next year. Remember that permanent island vacation starting December 31? See #1.

4. Maximize small business deductions: You need a new desktop computer. No, you need a power server. A half dozen workstations. Cellulars, Internet-connected handhelds and a couple of laptops for business travel. Speaking of travel, upgrades are expensive. Forget economy. Your company deserves the best. Don't own a business? You've got until end-of-year to mock up a business plan. You wrote fiction in college, right?

5. Refinance your home: Interest rates have never been lower. While you're at it, refinance your boat. Your SUV. Your mountain bike. Thousands of dollars in the hand is worth. Well, you know what it's worth.

6. Manage stock market capital gains: Sell! Sell! Sell! Regardless of what President Bush says on primetime, it is not your responsibility to buoy an economy sinking faster than the Titanic.

7. Do not donate to charity: There's no more room in your mailbox for those last-minute pleas, the slick ones with photographs of starving children whose abnormally large eyes stare at you from the coffee table and follow you across the room? It's a demonic scheme to rid you of your money. Do not recycle the requests - they will call out to you from the forest-saving bin. Toss them in the landfill-gobbling trash or burn them. Al Gore did not win the election - it is not your job to save the environment.

8. Defer your nuptials: You've waited your whole life to walk down the aisle of the Neiman Marcus' bridal registry? Getting married in 2001 incurs the marriage penalty. And that's just the husband.

You might also want to shut off your gas, power down your electric and stop your newspaper the last week of December. Keep the shades drawn - you don't want your pesky neighbors nosing around at the late-night vans removing the contents of your house. Pack a bathing suit, sunscreen, a couple of trashy novels and an empty suitcase. You'll need it. Tens and twenties take up so much room.

About the author: Lyssa Friedman is spending her early beachfront retirement plotting a hostile takeover of an undisclosed national tax preparation company.

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