- The Washington Times - Wednesday, December 12, 2001

Tax time is still more than four months away. But accountants say the final weeks of this year are a critical time for taxpayers to take steps to reduce the amount of money they will owe next April.
"This time of year is a window of opportunity if you need to make more deductions," said Chuck Marginot, partner at Crutchley, Marginot & Tosi, a Springfield firm that just opened new offices in Annapolis.
There are a number of steps taxpayers can take to save money later, such as donating to charities this year, review investment portfolios and settle financial transactions that could be counted as deductions or savings on their 2001 taxes.
Accountants also urge taxpayers to start thinking about paying for their retirement or children's education.
"It's an important time," said Jackie Perlman, senior tax research analyst with H&R; Block. "My advice is keep good records, be well organized."
It is also a good idea to defer any additional income until January to avoid paying higher taxes, since a new tax law lowers rates for next year.
"If you're given a choice of when to receive your [holiday] bonus, you might want to consider taking it in January," Ms. Perlman said.
"Certain things have to be done by December 31," she said, adding that taxpayers can also save money by paying off medical bills or state and property taxes before the year's end.
Another concern during tax season is investments. The market tumbled last year, leaving a trail of heavy losses and desolate investors. Losing money, however, can help at tax time.
"Generally, people should make sure they've looked at their capital gains and loses," Mr. Marginot said, explaining that investors who claim their losses can improve their tax situation.
Before New Year's Day, taxpayers also should consider donations to charities. The millions of Americans who donated to relief funds following the September 11 attacks can deduct those contributions from their taxable income.
But accountants note that, while taxpayers can count money and goods as deductions, they cannot count time volunteered as a deduction.
"If you went over to the Pentagon site or ground zero in New York and helped clean up, that's nice, but it's not tax deductible," Ms. Perlman said. "But any out-of-pocket expenses like lodging or travel expenses [to the sites] are tax-deductible."
Accountants also recommend that parents talk to financial advisers about the most tax-free way to save money for their children's college education. The same advice is offered to workers starting to plan retirement.
Taxpayers who have all of their documents ready can have their taxes done earlier and avoid the rush when April 15 nears, said Neil W. Hepp, tax consultant for the AARP.

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