As I get ready to do my 2006 taxes, I am already starting my 2007 tax planning.
I am going to make a lot more money than I expected this year. I got a raise, but I forgot that I am also going to receive a bonus for my 2006 performance. What am I going to do? By getting this money, I will lose my eligibility for a property tax break in Arlington because my income will probably be too high. (For some reason, they keep raising the threshold income every year so I can’t tell for sure if I will or will not qualify).
Can I reduce my income or increase my deductions for 2007? I hope so.
First thing, now that I have a second stream of significant income, I am trying to max out my 401k. Yay! 20%! Too bad I can’t put in 21% for the rest of the year since my first 2 paychecks this year were only for about 15%.
I am looking into doing my eye surgery this year so that I spend a ridiculous amount of money on medical expenses this year.
No more student loans, so that’s out. I am planning on taking some classes for work, but those will be reimbursed. I do buy a lot of technical books for work. (er, maybe for fun too) So I can expense those. I think I could write off an OracleWorld trip that way and visit my family at the same time. That would be cool.
Anyhow, just thinking out loud. It’s not like I’m about to have a kid just for a tax deduction.
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{ 4 comments… read them below or add one }
Yes, please no babies for taxes
Don’t reduce your income, recatagorize it.
Create a business entity and have your earnings paid to the entity. It will not take away from your relief and keep you moving forward.
Donate it to me!
(or, donate it to a worthy cause)
Of course those work-related deductions can only be deducted to the extent that they exceed 2% of your AGI. For 2006 it looks like I’ll come in under the limit for like the first time ever. So none of that will be deductible. If you have any Schedule C income though and can justify deducting against that then they are all deductible…. At some point I am going to begin claiming that I am in the business of trading futures and then claim expenses against that (non-interest investment expenses are also hit by the 2% threshold but not expenses for those whose business is “trading” rather than investing).