Lowering your taxes starts with planning, and the sooner you begin, the better. Tax benefits can help you accomplish a wide range of financial goals — saving for a child’s education, funding retirement, or growing your business. In order to make the most of your money, you need to minimize your tax liabilities and take advantage of every available savings opportunity.

As you know, tax laws change often. Congress has passed historic legislation in recent years, providing valuable tax savings to individuals, families, investors, and businesses. But many of these breaks are temporary and will expire over the next several years.

The current tax climate

The Small Business and Work Opportunity Tax Act, a small business tax relief package worth $4.8 billion, was signed into law on May 25, 2007 as part of a supplemental spending bill that funds military operations in Iraq. This measure also raises the minimum wage from $5.15 to $7.25 over two years. To help offset the burden of the wage hike for small businesses, favorable tax reform extends Section 179 expensing through 2010 with higher dollar limits and continues the Work Opportunity Tax Credit (WOTC) through August 31, 2011.

One revenue-raiser included in the bill to help cover the cost of the tax breaks is the expansion of the “kiddie tax.” In 2006, the age restrictions for the kiddie tax jumped from 14 to 18, and the 2007 measure bumps the limit to age 19 (age 24 for students) beginning in 2008.

Extending a number of temporary tax breaks, the Tax Relief and Health Care Act of 2006 reinstates the higher education tuition deduction, renews the deduction for state and local sales taxes, enhances tax breaks for Health Savings Accounts (HSAs), and continues valuable business incentives.

Retirement opportunities also get a boost, thanks to the Pension Protection Act of 2006 (PPA), which makes permanent the higher contribution limits and “catch-up” opportunities for qualified retirement plans and Individual Retirement Accounts (IRAs). The PPA also ends the uncertainty surrounding the future tax benefits of 529 plans, making tax-free withdrawals for qualified education expenses a permanent feature. For taxpayers interested in donating IRA assets to charity, this tax package permits those age 70 ½ and older to take tax-free distributions from their IRA up to $100,000, provided the funds go directly to a qualified charity.

Investors have a few more years to take advantage of lower capital gains and dividend rates, which were extended through 2010 by the Tax Increase Prevention and Reconciliation Act of 2006 (TIPRA).

Early planning is key to making the most of your opportunities. Some available tax breaks will only be around for a few more years.

Bill Rush MOSBY, Jr. is a Certified Public Accountant with the accounting firm of Silas Simmons, LLP, located in Natchez.