With just a few short weeks to go before the end of the year, it’s important to take a look at your tax situation and consider ways to decrease your tax obligations. In other words, it’s time for tax planning. We put together the following tips for you to support smart tax decisions:
- Stay apprised of potential tax provision extensions. Congress still has time to extend some popular tax provisions before the end of 2015, so keep an eye out for news on provisions including (but not limited to): taxpayers 70.5 years and up can make tax-free charitable contributions, businesses can deduct half of eligible equipment placed in service, and more!
- Track the time you spend on business activities. Business owners may be exempt from the 3.8 percent Medicare tax on business income if you are active enough in the business to avoid being a “passive investor.”
- Keep on top of information reporting. Make sure you complete your mandatory reporting on time this year to avoid potentially large penalties.
- Make good on your state and local tax obligations. Remember that State and local governments impose their own filing and payment responsibilities with income, sales, and property taxes to avoid added penalties.
- Accelerate deductions and defer income. When it comes to taxes, you want to accelerate deductions and defer income. How? Consider deferring bonuses, consulting or self-employment income; also consider accelerating state and local income taxes, interest payments, and real estate taxes.
- Do you anticipate a tax shortfall? Take care of it with increased withholding. Check your withholding and estimated tax payments now while you still have time to fix the issue. If you face an underpayment penalty, you can eliminate the shortfall by increasing withholding on your salary or bonuses.
Our firm can help you take an in-depth look at your current tax position, explain how changes to the tax code will affect you and your business, and help you implement strategies to reduce your tax bill. Contact us today so you can benefit from advance planning this coming tax season.