There is something frustrating about the financial planning calendar. People need to make decisions by the end of the year, but that is exactly when the distractions of the holiday season are at their peak. There is an added twist for 2012: with the pending expiration of the Bush tax cuts, no one knows for sure what tax rules will be in effect for 2013 and beyond.
One still needs to do what one can. Bill Harris, CEO of Personal Capital, sets forth a checklist on Inc.com. The general theme is to accelerate as many deductions as possible into 2012, where the tax treatment is likely to be more favorable.
His suggestion on capital spending will be of particular interest to small business owners. The generous Section 179 write-off drops next year from $139,000 to $25,000, while the 50% “bonus” depreciation deduction goes away entirely. It makes sense in this environment to do one’s capital spending by the end of the year if possible.
It may be hard to schedule during the holiday rush, but a timely chat with your tax advisor by December 31 may be the best guarantee against Santa leaving a lump of coal in your stocking. Of course, there is not much one can do escape the longer term designs of a government (and an electorate) enamored of high tax rates.