As we enter mid-year, we find ourselves forgetting the pain of income taxes paid and not yet ready to worry about taxes of the future. It's summertime and we're enjoying our families and vacations. Nevertheless, now is the perfect time to seriously consider how to lower your taxes for 2004.

Several of the "gifts" we received from Uncle Sam in the form of lower taxes will expire this year. Let's get busy opening those packages before we must return them unused.

If you're considering buying any equipment for your business in the near future, this may be the best time to do so for a while. While we'll continue to have our beloved section 179 deduction for the foreseeable future, we'll see the limit drop from $100,000 to $25,000 at the end of 2005. We'll also lose the 50 percent bonus depreciation provision at the end of this year, if that method better fits your situation.

Consider shifting income to lower bracket family members, if justifiable, as the 10 percent rate bracket returns to its pre-2003 amounts next year. If you're married, consider the practicality of shifting future income to this year as the marriage penalty relief slips back some for both the increased standard deduction and the larger 15 percent rate bracket in 2005. While it's too late to do much about it, the child tax credit drops to $700 next year as well.

If you're flirting with a liability under the alternative minimum tax, the higher exemption amounts drop below where they were before 2003. Work toward using the exempt amount that you can in 2004 if the situation's within your control.

Other actions that don't have the same urgency, but still presentopportunities include:

Shifting investments to produce dividends instead of interest can reduce your tax rate to 15 percent.

Sell whatever appreciated capital assets you have left to benefit from the 15 percent rate. If you're already in a 15 percent rate bracket, your rate will only be at 10 percent (perhaps gifting some to the kids for their college tuition).

Work toward fully funding those retirement plans. Paying only $500 per month starting now will get you close to the $3,000 IRA limit before the end of the year.

Pay special attention to the changes in pretax health benefits. The new Health Savings Accounts are better than the traditional flexible spending accounts and you can use them for more medical expenses than previously allowed.

This itemization is not a complete list, but it should get you thinking. As we’ve learned, all of these provisions can change again anytime that Congress is in session, so watch for developments as the year unfolds. Nevertheless, it’s often wise to take advantage of what we know as certain...rather than miss an opportunity waiting for the uncertain.

Mark Patrick is senior partner with
Patrick & Robinson, CPAs, LLC and can
be reached at (904)396-5400 or by
Email at mark@cpasite.com.