Year End Tax Tips

Business owners quickly turn their focus at the end of the year towards their small business taxes. We have provided a number of helpful tips for small business owners that can pay significant dividends for the following year.

Update Your Accounting

Although you know it is a wise move to always make sure your books are up-to-date, sometimes they are not as accurate as they should be due to all of the other tasks you find yourself doing on a daily basis. Understand your company’s financial situation by keeping accurate and up-to-date books. Meet with your accountant for end of the year advice that could be beneficial to your organization.

Defer Income

If your cash flow can handle deferred income, it would be a good move to defer any income until after the New Year. Any payments to your company after the New Year will help cut your tax bill for that year. A deferral strategy should be developed by you and your accountant, and is based mainly in part to how your organization is structured (LLC, partnership, corporation, etc.).

Spend More

If our cash flow permits it (remember, cash is king!), don’t wait to make a purchase you know you will need for the following year. Go ahead and purchase the products or services you know your business will need for the immediate future. This will help maximize deductions for the year. Some of the expenses you may need to purchase could include office supplies, paying off bills early, repairs and maintenance, and equipment purchases such as computers or machinery.

Write-Off Inventory

You company can enjoy the added deductions of any inventory you may have that has been damaged or are no longer in use.

Contribute to a Retirement Plan

A great way to reduce your income for this year is to set up a retirement plan or simply making additional payments to your plan before the end of the year. If you are making contributions to a retirement plan, check the contribution limits for your specific plan (401(k), Roth IRA, etc.). Consult with your accountant or financial planner about the best strategy for you when you are thinking about starting or contributing to your retirement plan.

The items listed above are some simple tax tips that could benefit your business at the end of the year. Talk to your accountant about specific strategies that could work with your business.

10 Often Forgotten or Overlooked Tax Deductions and Tax Tips

Tax tips and tax deductions can save you thousands in taxable income.
The IRS is only interested in claiming that which they are entitled to, but
it’s up to you to determine what’s exempt from paying taxes on. The IRS
has the literature to explain what is deductible if you know what to ask for
or where to find it. Homeowners have the best advantage of itemizing their
taxes and again, it’s up to you to know how to avoid paying too much. Let’s
take a look at some often overlooked and legal deductions for your taxes.

Mortgage Interest is obviously a key place to look for tax deductions but did
you know these:

Tax Deduction – Tax Tip # 1

Mortgage fees known as ‘points’, discount points you may have paid to
acquire a better interest rate on your mortgage. These ‘points’ are deductible
on your taxes. A point is equal to 1 percent of the amount financed.

Tax Deduction – Tax Tip # 2

Refinancing your mortgage usually contains fees that you incurred to
re-establish your mortgage. There are many fees deductible on your
taxes hiding in this process.

Tax Deduction – Tax Tip # 3

Changing jobs or residence because of a job, that caused a move of
more than 50 miles may allow you to deduct certain moving expenses
from your taxes.

Tax Deduction – Tax Tip # 4

If you paid a home mortgage pre-payment penalty, it may be deductible
from your taxes.

Tax Deduction – Tax Tip # 5

Refinancing your home can incur several fees that you can deduct from
your taxes. Ask your tax advisor for a list of refinance deductible items.

Tax Deduction – Tax Tip # 6

Pro-rated mortgage interest is often overlooked on your taxes, check
your closing settlement sheet.

Tax Deduction – Tax Tip # 7

Property taxes on a home you sold last year as well as the property taxes
on your new home can be combined to give you a greater deduction on
your taxes.

Tax Deduction – Tax Tip # 8

Pre-paid property taxes or pre-paid mortgage interest is often overlooked.

Tax Deduction – Tax Tip # 9

Casualty Loss if not compensated from an insurance claim can also be a
huge tax deduction. This is property loss due to fire or weather related
damages.

Tax Deduction – Tax Tip # 10

If your home is on leased land, you may be able to deduct rent payments
for the land. There are specific guidelines here, so seek these requirements
from a knowledgeable tax advisor.

It’s important that you retain as much of your hard earned money as legally possible
and it’s your choice to find out what you can legally deduct and claim on your taxes.
For more detailed assistance on what you can do to reduce your tax debt, don’t
hesitate to ask for assistance. It could save you thousands of dollars in a single year.