Love and taxes
Musical break

Counting down to Christmas and tax savings

Calendardec05_3_3The first full week of December begins today. It’s also only 20 days until the packages get ripped open, another turkey is consumed -- although we opt for ham (love that HoneyBaked). Who came up with the great idea of eating the same meal twice within one month, anyway? The American Turkey Council? -- and the realization hits that one more year has zoomed by.

Things are going to get really crazy in these next 20 days, especially if you’re one of those adrenaline shoppers who loves the rush of buying the last gift at the really, really last moment. I’m usually pretty well-prepared for the holidays, with cards ordered from the National Wildlife Federation by August and major gifts for everyone purchased via catalog or online by October, so that when December arrives I don’t have to bother going store to store. My dear husband is over there across the room, muttering something about obsessive-compulsive. I think he hasn’t quite caught Christmas Fever yet.

But 2005 has been anything but usual. Selling the Florida house, packing it up, driving 1,300 miles, sponging off a relative for a couple of months, buying the Austin house, getting our possessions delivered, walking past dozens of boxes in our dining room that five months after coming off the North American van still contain many of said possessions and now preparing to have our first Texas Christmas in ages. The unusual nature of this Christmas was magnified over the weekend when, for the first time in years, I actually had to pop into a mall to pick up a few holiday items.

Well, “pop into” isn’t really the right phrase. It was more like wade into the mall. We actually got a great parking space, but that didn’t make up for the crush of consumers in the building itself. As I mentioned in an earlier post, I’m not a shopper and my foray into the chaos only reinforced my already entrenched purchasing tendencies. I wish it was possible to get everything online. Unfortunately, there still are a few things that don’t really lend themselves to cybershopping.

Take buying a car. Gotta kick those tires, take a test drive that turns the sales rep’s knuckles white, put up with his revenge for the test drive when the price haggling starts, and make sure the auto truly does have that new car smell.

A car decked out with one of those giant bows could be a nice Christmas gift. It also could be a good way to cut your tax bill. There’s this sales tax deduction where you can opt to deduct the total sales taxes you paid during the year if you don’t have a state income tax. Even if you do live where the state taxes your income, you can still opt to write off your sales tax total if you've spent so much (most of it probably this month!) that it's a larger amount. A nice feature of the break is that you don’t have to have every receipt to claim the deduction; the IRS provides tables where you can find your state’s deductible sales tax amount based on your income.

This sales tax break has one other neat bonus: When you buy an auto (or boat or other motorized vehicle), you can add that item’s sales tax amount on top of the prefigured deduction amount from the table. Those combined numbers could come to quite a sizeable sum, one big enough to make a difference in your 2005 tax bill. There’s just one possible catch. This tax break is scheduled to end after this year. A one-year extension is on the December Capitol Hill agenda, sort of a special holiday gift to those of us in Texas and the other no-income-tax states, but you never know what Congress might do.

So if you’ve been thinking about buying a car sometime soon, and you expect to claim the sales tax deduction on your 1040, now is the time to head over to the dealership. That way you can get yourself a nice motorized gift and hedge your tax bets by buying it in December instead of next month, when its tax-break value might be zero.

Sorry if this talk of sales taxes and deductions and possible auto purchases has added yet another item to your already long December to-do list. But the tax geek in me wouldn’t let me forgive myself if I didn’t mention that amid all the pre-Christmas chaos, you also need to think a bit about taxes. The auto sales tax angle is just one example of how a little planning in December could help cut your coming tax bill. So throughout the rest of this month, I’ll be posting other year-end tax steps you can take to help make April 15 a little less painful. Just my little gifts to you!

P.S. -- It's the National Turkey Federation, not Council (thanks to my hubby for the investigative work). And if that's not enough fowl for you, I also ran across The Poultry Site. It has a turkey section, a free e-mail newsletter and links to The Pig Site and The Fish Site. Enjoy … or maybe become a vegetarian!


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