Time to tidy up 1999 tax matters; Prudence: Autumn is here, and families need to make some important decisions about their taxes.; DOLLARS & SENSE


Accelerate a charitable contribution or defer a bonus.

Accelerate a tax loss or defer a capital gain.

Accelerate a divorce or defer a wedding.

Although it's October, there are plenty of opportunities for planning to minimize 1999 taxes, experts say.

Take the wedding -- but take it carefully, advises Keith Huebel, tax manager for Naden/Lean LLC, a Timonium accounting firm. While there are tax advantages to waiting until the new year to wed, injecting such topics into romantic planning can be "like driving a Mack truck down a one-lane road," Huebel warned.

"I said to a client, 'Plan for the wedding after Jan. 1, but don't tell your fiancee you're doing it for the tax implications. Just say you want to get married in the spring.' "

Huebel calculated the tax for a hypothetical couple, one making $115,000 this year, the other making $65,000. If married by Dec. 31, they would file jointly, and thus owe the Internal Revenue Service $31,064. If not married until Jan. 1 or after, and filing separately, they would owe a total of $25,982. Combining tax planning with wedding planning yields a savings of more than $5,000.

Even without a wedding (or divorce) in the offing, fall is a time that taxpayers should rough out their current-year taxes and take action, said Mildred Carter, a senior tax analyst for CCH Inc., an Illinois publisher of tax guides, and author of "Year End Tax Strategies."

The basic concept is simple: If you expect to be in a higher tax bracket next year, try to take more income this year and get more deductions next year. If you expect to be in a lower bracket next year, take deductions now and try to postpone income.

Of course, it rapidly becomes more complicated. For example, increasing numbers of taxpayers are subject to the alternative minimum tax. If you are, more deductions this year can't help you, and you want to defer those write-offs until next year, when they might make a difference.

Here are some ways of moving income or deductions from one year to another, according to several tax experts:

Making an extra mortgage payment this year increases the interest deduction. (Make things clear with the lender; extra payments are often applied to principal, which does help with taxes.)

Take tax losses on stocks to offset gains or to reduce taxable income in general. But check the date you acquired the stock; long-term gains, on stocks held more than a year, are taxed at a lower rate than short-term gains. Also, if buying or selling mutual funds or real estate investment trusts, check the dates for capital gains distributions; you may be able to avoid being taxed for this year's distribution.

Make charitable contributions before January. If you are going to donate something that needs to be appraised, start the process soon.

Spend for maintenance (as opposed to improvements) on rental property before the end of the year.

Step up contributions to an individual retirement account (IRA), 401(k) or SIMPLE (Savings Incentive Match for Employees) plan.

Make an estimated payment toward state income tax before the end of the year.

If you have pre-tax accounts for child care or medical expenses, make sure you spend the allotted amount. If you don't spend the money, you lose it.

"Bunch" health-related expenses into one year or another so they reach the threshold for deductibility, 7 1/2 percent of adjusted gross income.

If you turned 70 1/2 years old during 1999, you must begin taking retirement distributions by April 15. Determine whether it would be advantageous to begin during 1999.

When it pays to wait

By waiting until next year to get married, this high-income couple could save more than $5,000. This example was developed by CPA Keith Huebel of Naden/Lean LLC.

John Mary Combined, Married

single, single, filing jointly

Income, $115,000, $65,000, $180,000, $180,000

Deductions, $29,100, $15,200, $44,300, $41,335

Federal tax, $18,356, $7,626, $25,982, $31,064

Note: By filing jointly, the couple would lose $1,665 in deductions because of limits on deductions as a percentage of adjusted gross income.

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