Year’s End Is Opportunity For Income Tax Maneuvers

If you thought you were being charitable today, buying Christmas gifts for friends and family, take another look at your federal income tax bracket. You may find that you need to keep on giving.

This is the last week of the year to donate to charity and take other action to cut your share of federal income tax owed April 15, 1996.

The Institute of Certified Financial Planners and others have listed several things that some taxpayers can do to lessen their tax burden and keep more money for themselves:

Defer income into next year so that you won’t owe tax on it until 1997.

The self-employed could delay sending their bills until January. If you work for somebody else, you could ask that any year-end bonus or commission be delayed.

Delay taking a capital gain on an investment by not selling the assets until 1996. This could be especially helpful if you believe that Congress will reduce the capital-gains tax.

Right now the tax is a maximum 28 percent on long-term capital gains, which are the profits made from selling an asset held more than a year. But Congress is considering cutting that rate in half, effective next year.

Accelerate expenses that are deductible in 1995.

For instance, you might send your January mortgage payment early enough to be credited by Dec. 31.

You also could clean out a closet or garage and donate to charity all the stuff you’ve been accumulating for years. Mothers who have a baby before Dec. 31 receive an extra exemption for 1995.

The self-employed can splurge on supplies and other business expenses before Dec. 31. The IRS allows self-employed taxpayers to buy up to $17,500 worth of equipment and write it off immediately rather than depreciating it over several years.

Take the so-called bad-debt deduction for money that others owe you. To qualify, you must begin trying to collect the money before the end of the year. You must document that the debt became uncollectible in 1995, such as securing a written statement from the debtor.

In other events this week:

Today

Christmas Day. Most financial markets around the world are closed.

Government of Japan decides what fiscal 1996 budget bills to present to the Diet.

Wednesday

The Conference Board in New York releases results of its monthly survey on consumer confidence.

U.S. Department of Commerce scheduled to release November durable goods report.

National Association of Realtors issues report on November existing home sales.

Friday

Conference Board releases November leading indicators report.

Sunday

New Year’s Eve. Annual ball-dropping ceremony in Times Square will include the first “Webcast,” allowing Internet users to participate interactively with the gathered crowd.

Association for Manufacturing Technology in New York issues machine tools report for November. , DataTimes ILLUSTRATION: Graphic: Sales tax receipts

MEMO: This sidebar appeared with the story: ON THE SHELF Forbes, Jan. 1, 1996: Cover story tells why analysts cite Hewlett-Packard as the nation’s top performer of 1995. Individual Investor, January 1996: Michael’s Stores and Novell are among 25 stocks to own in 1996, II says.

Soft sells Computer City’s top 10 selling software titles: 1. Myst 2. 11th Hour 3. Corel Print House 4. Rebel Assault 2 5. X Wing Collection 6. Warcraft 2 7. Flight Simulator 5.0 8. Pocahontas Animated Storybook 9. Netscape Navigator 10. Quicken Deluxe 5.0