Mandatory IRA Withdrawals
If you are 70 A½ or older, you must withdraw an IRS-specified amount, called a Required Minimum Distribution, out of all qualified retirement accounts by December 31. Qualified retirements accounts include Traditional IRA, SEP, SIMPLE, 401(k), 403(b) and other tax qualified plans. Failure to make a withdrawal triggers a tax of 50 percent of the amount you did not take. In all cases you will pay less taxes by taking the Required Minimum Distribution on time. For retirees looking to generate an income stream that they cannot outlive, some Guaranteed Lifetime Income annuities can often provide an annual income stream higher than the Required Minimum Distribution amount with less tax exposure.
Resource: Scott R. Alexander, MBA of Alexander Financial Group 295-8338

A Bright Side to Decline in Home Value
Many tax advisors are recommending that those who purchased property in the last four to five years look into a "decline-in-value" review. Los Angeles County residents have until December 1, 2008 to file. This simple, one-page application can be found at
http://assessor.lacounty.gov or can be requested by calling
888-807-2111. In May of 2008, the L.A. County Assessor's Office completed its review of 318,000 homes and condominiums that had been purchased between July 1, 2004 and June 30, 2007. Their analysis resulted in lower tax assessments on 128,000 homes and condos. These lower assessments are reflected on the October 2008 tax bills.

According to the May 27, 2008 press release issued by the Los Angeles County Assessor's Office, "The average reduction in assessed value is about $73,000, amounting to an average property tax savings of approximately $750." Those who purchased their property outside of the time period used for the review noted above, and believe that their property is assessed above its actual value as of January 1, 2008, should think about filing the Decline in Value application.
Resource: Tamara Gurney President & CEO-Mission Valley Bank 775-4111

Smaller Taxes for Small Businesses
For many small businesses, something very important but often overlooked is year-end tax planning. By all means, consult with your tax professional - but here are a few tips that may help you reduce your overall tax bill.

Accelerate expenses and postpone or defer revenue. Pay business expenses early or charge them on a credit card before December 31, 2008 and they will be deductible. Have customers defer paying you until after year end or postpone billing your customers until after year end.

If you are considering the purchase of equipment for your business, be aware that you may expense up to $250,000 of these purchases on your 2008 tax returns. This equipment must be placed into service prior to December 31, 2008.

Effective July 1, 2007, Santa Clarita received final designation from the State of California on its Enterprise Zone. If your business is located within this Zone, there are numerous potential tax benefits available. So, get in the Zone!
Resource: Kris Hough of SCV Bank 255-9250

Children as Tax Exemptions
Among the many disagreements between divorcing couples with children is the fight about who is entitled to the tax exemption for minor dependent children. The taxing authorities assume that the spouse who has custody of the children is entitled to the exemptions. Of course parents are allowed to trade the exemptions back and forth freely using IRS Form 8332. Parents with multiple children have the option to split the exemptions. However, parties often fall into this pitfall and what appears to be a fair split at times prevents parties from maximizing their tax savings. The best approach as it relates to exemptions is to consult an attorney who can consider how to minimize taxes and then adjust support to allocate those savings between the parties.
Resource: James P. Reape and Paulette Gharibian of The Reape - Rickett Law Firm 288-1000

Make the Standard Deduction Work for You
If your itemized deductions are just at or below the standard
deduction (currently $10,900 for joint filers and $5,450 for singles), they don't generate any tax benefit for you. However, you can bunch itemized deductions from two calendar years into a single tax year to take full advantage of them and exceed the standard deduction that year. Then you can take the standard deduction the next year. Following this two-year pattern results in greater deductions overall.

Deductions that work well for this strategy include charitable contributions, property taxes, the fourth quarter estimated state income tax payment, and your January mortgage payment. If you are not itemizing and pay real estate tax on your home, you can deduct up to $1,000 of real estate tax paid for joint filers, or $500 for single filers. Next, you want to contribute to your Employer-Sponsored Retirement Plan. The 2008 annual deferral limit for qualified retirement plans is $15,500. If you are at least age 50 by year-end, you can contribute an additional $5,000 to 401(k), 403(b) and 457 plans. These contributions normally decrease your taxable income and the income taxes there on.
Resource: Michael L. Green of Michael L. Green Tax and Financial 257-4111