Welcome to Tax Season 2002! While traditional accounting ideas exist to help you and your business save on taxes, with the Economic Growth and Tax Relief Reconciliation Act of 2001 there are even more opportunities to consider. Unfortunately, many of the provisions and opportunities don’t begin until 2002 or 2005. The following apply to 2001:

Increased retirement contribution amounts –
Be sure to check with your CPA for your particular retirement plan circumstances both individually and corporate.

Educational IRAs -
Educational IRAs have been expanded to allow withdrawal opportunities for tuition and all related educational expenses for elementary and secondary education.

529 College Savings Plans -
Withdrawals from these plans won’t be taxable to students of any age as long as distributions are for college and related expenditures (including room and board). This is similar to the Roth gains and income that won’t be taxable upon withdrawal if the age and 5-year restrictions are met.

“Catch-Up” Rules for Retirement Contributions -
If you’re 50 or older, plan on taking advantage of the “catch-up” rules for retirement contributions. Remember, you can make year 2002 IRA contributions as early as January 2002. Also note these contributions can be held in any type of IRA account depending on market conditions, i.e. moneymarket or CD’s.

College Educational Expense Deduction - Review the new college educational expense deduction for those of you excluded from taking the HOPE or Lifetime Learning Tax Credits because of your income levels. During years 2002 through 2005 there could be a tax deduction opportunity for you.

Capital Gains Tax -
There are new capital gains tax reduction opportunities for individuals and businesses that have acquired assets during or after 2001. You may be able to structure your transactions to take advantage of the 18% or 8% rates instead of the 20% tax rate on capital gains property.

The most powerful tax reduction strategy is education and communication. Tax laws and loopholes are limited in their scope. What’s important is how they can be combined to fit your situation to minimize your overall individual and businesses’ taxes.

Everybody’s overall tax situation is unique and should be reviewed on an individual basis especially after you or your business experience a major change. Your SBRN financial professionals stand ready to assist.

Elizabeth Haring , CPA is a partner
in Haring & Bushnell, P.A. She can
be reached at (904) 565-9045 or eharing@cxp.com.