Tax Free Interest Income
The interest that you earn on US Treasury securities is taxable on your federal tax return, but most likely not taxable to most states. If you own government securities, this would come to your attention at tax time. But some mutual funds invest in government securities, and do not report them on a 1099. When you receive the informational materials at the end of the year, check to see if any of your mutual fund income is in government securities. Since most states do not tax government security income, more than likely you will not have to pay state income tax on that income.

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Like Kind Exchanges
If you can manage to acquire another investment property of a like kind and do an exchange, you can avoid a taxable gain on the sale of business or investment property. This strategy allows you to reinvest your profits into the new property, and defer any taxies in the current year. However, this does not work for inventory and stocks, but most other types of property qualify.

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Hire Your Child
If you own a business, you may want to consider hiring your child. By hiring your child, you can deduct the wages you pay him or her, and the income is taxable to your child at their lower tax rate. Not only that, but the income is tax-free if the amount you pay them is less than the child's standard deduction of $4,400 for 2000. You can pay $2,000 more, if you have the child fund a traditional IRA . Of course, if you still provide over half of the child support, you may still claim them as a dependent.

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Retirees Make More Before Losing Benefits
You'll be happy to know that if you are 65 to 69 years of age, and drawing social security benefits, Uncle Sam has raised the amount of wages you can earn before your benefits are effected. In 1999 you could have earned $15,500 in wages before your benefits were effected. In 2000, it goes up to $17,000, in in 2002 it goes up to $30,000 annually. Your Social Security Benefits are reduced by $1.00 for every $3.00 of wages you earn through employment over that annual amount. In 1999 it was $1.00 for every $2.00 earned. Those annual limits are not effected by investment income received. Finally, after you reach the age of 70, you are exempt from these earning limits.

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Unnecessary Mortgage Insurance
When you purchased you home, you may have been required to purchase private mortgage insurance if you put less than 20% down at the time of purchase. This insurance is very expensive, and if you can avoid paying these premiums you're usually better off. As you equity increases, either through appreciation or improvement of your property, or by simply paying down the loan, your lender will usually allow you to cancel the insurance. Usually, you must wait at least 2 years form the date you acquired your home and have at least 20% equity in your property. If you think you may be eligible for this, you should contact your lender and talk them about canceling your mortgage insurance. It could put a little more money in your pocket each month.

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Get Organized
Nothing dismays a tax practitioner more than a client who comes in with a shoebox full of old bills, checks and whatnot in no discernible order. Eventually the tax practitioner can sort them out. But there are better, more productive uses for the tax practitioner's time - and you’re paying for it.

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Around the end of the year look at your previous tax return, and make a list of all the deductions you had, and what you spent for those deductions this year. Make sure to include all the new deductions you may think you have. If you have any questions, don't hesitate to phone and ask. In the long run, you'll save time and work for both the tax practitioner and yourself.

Tax Change Awareness
Tax reform was a sweeping revision of the entire tax structure. Every year brings additional changes that could affect you. Your tax practitioner can keep you up-to-date on new laws, regulations, etc. 

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