A LAST-MINUTE TAKE ON HOW TO TRIM TAX BILLS FOR 1993
With the New Year approaching, taxpayers still have time to reduce their tax bills for 1993, according to accounting firm Ernst & Young in New York. Some suggestions:
* Take a loan from the government. It is not often that the government lends taxpayers money interest-free. Recognizing that the new income tax laws will pose a hardship for some taxpayers, Congress built an installment payment plan into the new legislation. Those facing higher taxes as a result of the new laws can pay the increase in three installments with no interest or penalty.
* Collect now, save later. Upper-income taxpayers may be able to save on taxes by asking their employers to accelerate their pay and bonuses before January. This allows taxpayers to avert the 1.45 percent Medicare tax that goes into effect Jan. 1. Self-employed workers who accelerate collections can save 2.9 percent in Medicare tax.
* Delay income, save now. Asking employers to delay income and bonuses until the new year could be a better move for some taxpayers. Taxes on income received after Jan. 1 will not be due until April 1995 - giving taxpayers an extra 12 months before the Internal Revenue Service comes calling.