Start the new tax year on the right foot.   Starting a new year is a good time to make a fresh start on resolutions. One resolution that should be relatively easy to keep with just a little effort is to maximize your tax benefits. The new year is the perfect time to make this resolution since it is also the start of a new tax year for most taxpayers. While the tax law has endless complexities, you always should keep "the big picture" in front of you (and let us sweat the details). Consider four key points as you begin the new year.   1. Remain nimble   Congress left a number of important tax issues hanging as it left for the year. Tax shelter legislation had become a very high profile issue in 2003 and virtually all proposed tax bills contained provisions aimed at curbing tax shelter abuses. The administration has also indicated that it is intent on reforming the pension system by replacing many existing retirement plans with less complicated versions. Congress also left standing an energy package that provided a number of tax-related incentives for consumer investment purposes. As a result, keep your eyes open as many of these measures are likely to be reconsidered in 2004. 2. Recordkeeping: half the battle   As you are gathering the information needed for preparing your 2003 tax year return, try to avoid bad past practices. Examine recordkeeping procedures to determine if you are losing tax dollars. Substantial tax dollars are lost due to poor recordkeeping. Business expense logs are prime sources to keep control of. Don't neglect to see whether accounts payable and receivables could be recorded more precisely to allow for more aggressive depreciation deductions and other accounting maneuvers. Non-business owners might also benefit from better investment recordkeeping in light of the lower rates on capital gains and dividends or more precise tracking of medical expenses or charitable contributions.   3. Maximize tax-deferred savings   Make sure you are taking full advantage of tax-deferred savings opportunities. Maximize monthly contributions beginning in January. Retirement plans including 401(k) plans, Keogh arrangements and individual retirement accounts; as well as tax-deferred education savings plans and medical savings opportunities should be maximized each year.   The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) phases-in increases in various retirement plan limits that will increase in 2004. While IRA contribution limits remain the same ($3,000); limits on employee contributions to a 401(k) plan increase to $13,000, and to $16,000 for employees age 50 and over eligible for the catch-up contribution.   Employees who are looking to maximize contributions for the year should act as soon as possible to adjust amounts withheld from their pay. The increases also apply to 403(b) plans, 457 plans and the employee deferral portion of SARSEPs. SIMPLE plans also had an adjustment in 2004 for employee contributions: $9,000 for the regular contribution limit and $10,500 for those "catch-up" eligible contributors. 4. Adjust personal wealth strategies   Congress changed the maximum tax rates on capital gains and dividends last year. The new capital gains/dividends rate calls for a maximum tax of 15 percent. The lower rate has encouraged the creation of new investment strategies. These strategies are based both on the changing value of various investments as the result of the changing tax laws, and on the changing tax computation required for these investments.   The gradual phase-in of the repeal of the estate tax marks another milestone in 2004. The lifetime exclusion from estate taxes rises to $1.5 million in 2004. The gift tax lifetime exclusion, however, remains at $1 million. 2004 represents, therefore, the first year in a long time that there is no longer one unified credit amount for estate and gift tax purposes.   Click on the images above for other great articles in our January 2004 Client Line and Tax Report Newsletters