Tax Tips for Year-Round Tax Savings

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Are you one of those millions of Americans who thinks that only the rich can save real money on taxes? Then you haven’t read “Tax Tips for Year Round Tax Savings.” This unique, plain-language book covers key changes introduced by recent tax acts. It shows you how people of even modest means can save truly big money on taxes—legally. It’s not a publication that you’ll use only between April 1st and 15th. It teaches you angles to save on taxes throughout the year—so tax saving opportunities are not lost forever in the frantic last minute rush.

Learn how to make the continually changing tax laws work for you with this authoritative analysis of scores of major and minor changes. And learn the steps you should take to reduce taxes for this year and even gain a start on future years.

Rave reviews for previous editions:

James E. Maule, a professor at Villanova University School of Law and Graduate Tax Program, blogs on taxes. Below are his takes on the book.

Tax Planning: A Chore That Never Sleeps

Six years ago, I had the opportunity to review Julian Block’s “Year Round Savings.” Now, Julian has published an updated version of this helpful guide to tax planning. As usual, he has done his typically fine job with the topic.

The world of tax handbooks is replete with guides to year-end tax planning. Too often, people and businesses wait until December and then engage in frantic efforts to rearrange transactions to reduce tax liability for the year. Unfortunately, there is only so much that can be done in December. The other eleven months of the year provide opportunities that fade away as the page on the calendar turns to the next month. For some planning opportunities, actions must begin in January if the opportunity is to be maximized.

Julian begins by explaining why tax planning is important, and illustrates the parameters that apply to the process. Though tax professionals might find this explanation to be quite familiar, the typical taxpayer without a tax practice background almost certainly will benefit by reading this chapter. Where there are opportunities to make year-end decisions that make use of available deductions or that reflect the impact of the decision, Julian examines those situations. For example, he explains why two people considering marriage should run the numbers when deciding on a December or a January wedding date.

Julian recommends keeping track of potential itemized deductions during the year so that by the end of the year decisions can be made more sensibly in terms of the timing of payments that can be made in December or January. Sometimes it makes sense to postpone a deduction and sometimes it makes sense to accelerate it. He points out that in many years more than half a million taxpayers claimed the standard deduction even though they would have reduced taxable income had they itemized their deductions. Julian then devotes chapters to each of the major itemized deductions, giving coherent explanations even of the complicated ones such as the medical expense deduction and the charitable contribution deduction.

Julian also examines how to plan for income. There are times when it makes sense to accelerate income into the current year and times when it makes sense to postpone it. However, making the timing decision stand up to scrutiny often requires making arrangements long before December. Julian deals with the opportunities for both the employee and the self-employed individual. He then examines investment income and discusses investment strategies available to taxpayers.

Gift tax planning and dealing with inherited property also get attention from Julian. He also explains how to compute a taxpayer’s “real tax bracket,” a lesson that needs to be learned by the taxpayers who confuse nominal marginal rate with effective rate. His subchapter on “Taxpayer Illiteracy” reminded me of some of the commentary I’ve shared on my blog. He shares my concern that most people do not understand the difference between a deduction and a credit, the meaning of progressive tax, and a variety of other important basic tax concepts. Julian explains why these things are important and why taxpayers should attempt to learn about them. And then his book proceeds to provide a capsule summary of how the overall tax system works, with an eye to helping people take advantage of the year-round planning tips.

After exploring the alternative minimum tax, another concept most taxpayers don’t understand, Julian closes the book with a three-pronged conclusion. He returns to the importance of making tax planning a year-round job, provides suggestions for where and how to get tax advice and to learn more about taxation, and advocates leaving a “letter of final instructions” to help survivors make sense of the decedent’s tax, investment, financial, and other situations.

I recommend this book just as I recommended Julian’s previous books.

A Tax Book for Tax and Non-Tax People to Read 

Julian’s book shakes us out of our single-minded focus on preparing tax returns for this year. In “Year Round Tax Savings,” Julian reminds us that it’s time to do tax planning for next year. Many people think tax planning is something done at the end of the year, when the finality of December 31 is on the near horizon. Yet maximizing tax savings often requires that expenses be paid, retirement contributions be made, and other transactions be undertaken early in the year. Julian devotes several chapters to “timing payments of itemized deductions” and “timing receipt of income.” Timing also gets important attention in his chapters on investment strategies. He asks if our “withholding is out of whack.” If it is, it’s best fixed by making adjustments in January or February, and not in November. The chapter entitled “Make Tax Planning a Year-Round Job” echoes the theme of the book.

This is a useful book. It is appropriate for people not expertised in tax law, but it also is a handy reference for tax practitioners who service individual clients. The anecdotes and stories sprinkled throughout the text are alone worth the read. My favorite is the widow who left cash in an armoire and jewels behind a loose board in a summer home closet. Law professors like myself can find themselves thinking “exam question, exam question” while they add more data to the “We don’t need to make up this stuff” mantra.

From Accountants Association of Iowa

Have you ever wanted a concise, simple to read and understand annual tax book with update? Have you ever wanted to recommend a tax book to your clients? “Year Round Savings” is a book perfect for tax preparers and their clients. Julian Block writes with clarity and humor. He includes great tips and cautions.

In the section on AMT, he includes this CAUTION: “Beware of generalizations, including mine. Our patchwork quilt of tax laws has become so complicated that some advice that could move your brother-in-law into a lower tax bracket could put you into a higher one.

Consider, for instance, the traditional advice to accelerate the payment of deductions and defer the receipt of income, whenever possible – a decision that should never be made without a thorough review of the numbers. Though still right for most people, that tactic can be inappropriate and even result in a bigger tax tab if you overlook the AMT…”

From The National Association of Personal Financial Advisors

The book is easy to read and well-organized. The summary and examples of the nuances of the new tax law can be helpful to planners in advising clients. It is a helpful reference on the current details and strategies of income taxation.

Block covers the tax waterfront with clear explanations of dependency exemptions; strategies for determining itemizing vs. standard deductions; timing payments of itemized deductions; timing receipt of income; various types of investment income; capital gains taxation and calculating the holding period; marital status and the timing of marriage and divorce; retirement plan contributions; phase-out of exemptions; maximizing charitable deductions by donating appreciated assets; kiddie taxes; state and city taxes; determining your effective tax rate; and the ABCs of the alternative minimum tax.

Block decries widespread taxpayer financial illiteracy and makes a good case for taxpayer education and year-round tax planning.

From Rockford Register Star

Year Round Tax Planning Pays Off

Here’s a “Trick or Treat” riddle: what is the largest expense in your annual household budget? Those who answered “housing costs” get the trick; if you answered “taxes”, you deserve the sweets. I suggest you treat yourself and get a copy of Julian Block’s excellent book, “Year Round Savings.” Block is a nationally recognized authority on taxes and has a knack for making the obscurities of the tax code understandable and even entertaining.

Do you know what your tax bracket is? Knowing what you pay in taxes for each incremental dollar in income is “the key to successful planning” and to knowing “what steps you can take to lower your taxes to the legal minimum.”

Block explores strategies for shifting investment income from those in higher tax brackets (e.g. parents, grandparents) to those in the lower two brackets by making gifts of stocks and mutual fund shares. These are built-in incentives for family members with charitable intent to understand how to use our tax system for the benefit of children and grandchildren.

Block illustrates important tax concepts with practical examples and straight-forward advice. For example, parents who are considering gifting assets to their children are counseled to attend a performance of “King Lear.” (i.e. don’t let tax considerations be the sole reason for making such an important decision.)

In this guide you will find answers to questions. What is the difference between a deduction and a credit? When should I defer income or speed-up expenses and why? How exactly do I calculate my real tax bracket? Would it be advantageous for me to plan my upcoming wedding this year or next year? (Tip for you right-brained guys: your tax savings from scheduling the wedding on New Year’s Eve may be spent on “bribing” your fiancée with a Hawaii honeymoon.)

Even taxpayers who pay someone else to prepare their returns would be advised to understand the basics of our tax system. As Block says, “At the very least, you should be knowledgeable enough to raise good questions and evaluate answers when you deal with a professional. The informed client gets the best advice.”

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