BANGOR, Maine — While Mainers may be more than ready to say goodbye to 2008 and all of its financial upheaval, experts say that taking action in the final hours before Jan. 1 can save some stress and dollars at tax time in mid-April.
Lee Chick, a certified public accountant at the Bangor office of Berry, Dunn, McNeil & Parker, said Tuesday that he is advising clients to review their investment portfolios and to consider selling depreciated securities. Tax filers then can deduct those losses — up to the amount of their capital gains, plus $3,000 — when they file their 2008 income tax returns
“It’s been a miserable year on the financial markets. People are feeling a lot less wealthy than they did,” Chick said. “At least they can mitigate some tax liability this way.”
Some clients who have called his office said that they had investment gains from earlier this year and wondered what to do.
“They can call their investment adviser and see if there are losses ready to be culled. If so, they can use losses from year-end selling to offset their earlier gains,” Chick said.
Another tax-minimizing tip is for filers who itemize their deductions to ramp up their deductible expenses by the end of this year, including charitable giving.
Some of Maine’s nonprofit agencies say that individual contributions, including year-end giving, are crucial to the success of their organizations.
“Everything helps,” said Kati McCarthy, the community advocacy coordinator for Spruce Run in Bangor.
The annual campaign for the Bangor Area Homeless Shelter occurs around the end of the year, said executive director Dennis Marble.
“So far, knock on wood, we’re keeping pace with last year,” he said. “I think people are recognizing that needs are up even if they’re facing more challenges themselves.”
Ken Nichols, an associate professor with the Department of Public Administration at the University of Maine, worked for 26 years with the Internal Revenue Service and has some tips for college students and other new filers.
“You don’t have to wait for all your tax forms to come in the mail before you start getting your own taxes ready,” he said, adding that the majority of information needed to file is located on the final pay stub of the year.
Of course, if an employee has moved during the year, some W-2s might get lost along the way unless they are careful to make sure their employers know how to find them.
“With students, that happens a lot,” Nichols said.
Of course, there’s not much time before the 2009 tax year begins, and for those who haven’t done much planning in 2008, Nichols has an idea.
Call it a New Year’s tax resolution.
“Ask yourself, ‘What didn’t I do this year that I regret? So that as I begin 2009, I will be keeping my records better,’” Nichols said.
He encourages tax slackers to start setting up file folders for the big deductions and drop records into them as they go along.
Charitable organizations will provide receipts for donated goods if asked, said Nichols, who encouraged would-be donors of larger items to have them professionally appraised for tax purposes.
Another useful idea might be to file taxes electronically to minimize math errors and speed up the processing, Nichols said.
He also suggests calling tax advisers soon to set up an appointment.
“Don’t be one of the 800 people trying to get in on April 14,” he said.
“I’d make sure that if I’d moved during the year, everybody who might be sending me tax information knows where to find me,” he said.
Early action and early filing will definitely hasten tax refunds — and minimize panic before the April 15 deadline.
“If you’re one of the however many million people who file in the middle week of April, it’s like a traffic jam,” Nichols said. “But if you file in late February, the roads are clear.”