Income Tax Planning

Litigation over the constitutionality of state tax benefits that began with the municipal bond sector has spread to Section 529 college savings plans. A class action lawsuit filed in Illinois on May 15, 2007 threatens the tax incentives used to induce residents to invest in a state's own Section 529 college savings plan versus out-of-state 529 plans. The case, Maryam Ahmad v. Illinois Department of Revenue, challenges the constitutionality of the Illinois law that provides a deduction from adjusted gross income of up to $10,000 for residents who invest in the state's 529 college savings plan, but none for residents who invest in the college savings plans of other states.

For those making estimated taxpayments (and for those who should), the dates of April 15th, June15th, September 15th, and January 15th usually don't ring in the joyous changing of the seasons, but instead the due dates for payment of estimated taxes. Keeping in mind the following rule throughout the year will ensure that you pay enough, but not too much. Paying too much, or leaving too much on account from the prior year, will cost you the forgone rate of return you could have earned. Not paying enough will accrue a penalty of 7%. Year after year, the savings, or conversely, the costs, compound quickly.