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Start your 2010 planning with your 2009 tax return

Have you been too busy to start this year's income tax planning? Would having an already completed reference guide help?

If so, pull your just finalized federal income tax return from the stack of to-be-filed paperwork. The forms offer valuable insight into your finances.

Here are two examples of how to use your 1040 for tax planning.

  • Line 12, Business income or (loss). Your business income impacts your adjusted gross income. AGI, in turn, affects credits and deductions, as well as federal and state income tax and self-employment tax (shown on Line 56 of your federal return).

    Tax-saving opportunities to consider for 2010 include hiring family members, starting a retirement plan, and keeping track of "soft" expenses such as business use of your personal vehicle.

    Financial planning tip. Assess the structure of your business. Incorporating or forming an LLC can limit personal liability.
  • Line 40, Itemized deductions or standard deduction. Did you just miss being able to itemize on your 2009 return? Consider timing deductions this year. For instance, you may want to plan now to accelerate charitable contributions or to bunch property tax payments into one year.

    As you scan your return, keep in mind the interrelationships between various income and deduction items.

    Example. Some itemized deductions, such as medical expenses, are limited to a percentage of AGI. That means tax planning affecting your business income can also have an effect on how much medical expense you may be able to claim.

We'll be happy to help analyze your return and maximize 2010 tax savings. Give us a call so we can begin today.

For more information, contact Ross Rizzo at 212-404-5528, rrizzo@sb-cpa.com.

"Tax Tips" are published weekly to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office.

The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance.

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