Unfortunately, since December 31 coincides with the tax-reporting period for 99 percent of U.S. individual taxpayers, the average taxpayer will only begin thinking about their 2007 taxes during the first quarter of 2008. Unfortunately, this delay is generally very costly, since almost every individual taxpayer reports taxable income on a cash basis, as opposed to an accrual basis.
In order to minimize tax liabilities, it is necessary to pay certain expenses before year-end in order to claim them as tax deductions. It is also important for taxpayers to determine if they are in an alternative minimum tax position, which can change the entire year-end tax-planning strategy.
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