year end

6 Last-Minute Tax Moves for Your Business

Tax planning is a year-round activity, but there are still some year-end strategies you can use to lower your 2018 tax bill. Here are six last-minute tax moves business owners should consider:

  1. Postpone invoices. If your business uses the cash method of accounting, and it would benefit from deferring income to next year, wait until early 2019 to send invoices. Accrual-basis businesses can defer recognition of certain advance payments for products to be delivered or services to be provided next year.
  2. Prepay expenses. A cash-basis business may be able to reduce its 2018 taxes by prepaying certain expenses — such as lease payments, insurance premiums, utility bills, office supplies and taxes — before the end of the year. Many expenses can be deducted up to 12 months in advance.
  3. Buy equipment. Take advantage of 100% bonus depreciation and Section 179 expensing to deduct the full cost of qualifying equipment or other fixed assets. Under the Tax Cuts and Jobs Act, bonus depreciation, like Sec. 179 expensing, is now available for both new and used assets. Keep in mind that, to deduct the expense on your 2018 return, the assets must be placed in service — not just […]
By |December 18th, 2018|tax planning, year-end|0 Comments

Year-End Tax and Financial To-Do List for Individuals

With the dawn of 2019 on the near horizon, here’s a quick list of tax and financial to-dos you should address before 2018 ends:

Check your FSA balance. If you have a Flexible Spending Account (FSA) for health care expenses, you need to incur qualifying expenses by December 31 to use up these funds or you’ll potentially lose them. (Some plans allow you to carry over up to $500 to the following year or give you a 2½-month grace period to incur qualifying expenses.) Use expiring FSA funds to pay for eyeglasses, dental work or eligible drugs or health products.

Max out tax-advantaged savings. Reduce your 2018 income by contributing to traditional IRAs, employer-sponsored retirement plans or Health Savings Accounts to the extent you’re eligible. (Certain vehicles, including traditional and SEP IRAs, allow you to deduct contributions on your 2018 return if they’re made by April 15, 2019.)

Take RMDs.

By |December 13th, 2018|tax planning, year-end|0 Comments

Catch-Up Retirement Plan Contributions Can be Particularly Advantageous Post-TCJA

Will you be age 50 or older on December 31? Are you still working? Are you already contributing to your 401(k) plan or Savings Incentive Match Plan for Employees (SIMPLE) up to the regular annual limit? Then you may want to make “catch-up” contributions by the end of the year. Increasing your retirement plan contributions can be particularly advantageous if your itemized deductions for 2018 will be smaller than in the past because of changes under the Tax Cuts and Jobs Act (TCJA).

Catching up

Catch-up contributions are additional contributions beyond the regular annual limits that can be made to certain retirement accounts. They were designed to help taxpayers who didn’t save much for retirement earlier in their careers to “catch up.” But there’s no rule that limits catch-up contributions to such taxpayers.

So catch-up contributions can be a great option for anyone who is old enough to be eligible, has been maxing out their regular contribution limit and has sufficient earned income […]

By |November 27th, 2018|contributions, New Tax Laws, retirement, tax planning, year-end|0 Comments

Mutual Funds: Handle with Care at Year End

As we approach the end of 2018, it’s a good idea to review the mutual fund holdings in your taxable accounts and take steps to avoid potential tax traps. Here are some tips.

Avoid surprise capital gains

Unlike with stocks, you can’t avoid capital gains on mutual funds simply by holding on to the shares. Near the end of the year, funds typically distribute all or most of their net realized capital gains to investors. If you hold mutual funds in taxable accounts, these gains will be taxable to you regardless of whether you receive them in cash or reinvest them in the fund.

For each fund, find out how large these distributions will be and get a breakdown of long-term vs. short-term gains. If the tax impact will be significant, consider strategies to offset the gain. For example, you could sell other investments at a loss.

Buyer beware

By |November 27th, 2018|tax planning, year-end|0 Comments

Challenging Tax Environment

challenge

Taxpayers and their advisers engaged in year-end tax planning for 2015 are challenged by the uncertain fate of “extender legislation.” In previous years, a number of “temporary” tax rules, i.e., those having a termination date specified in the Code, routinely were extended for one or two years, but this year, Congress has yet to act on a host of important provisions that expired at the end of 2014. Some or all of these expired provisions may be retroactively reinstated, thereby opening up some truly last minute year-end tax planning opportunities, but there’s no way of knowing if that will take place.
The tax breaks that expired at the end of 2014 include, for individuals: the option to deduct state and local sales and use taxes instead of state and local income taxes; the above-the line- deduction for qualified higher education expenses; tax-free IRA distributions for charitable purposes by those age 70-1/2 or older and the exclusion for up-to-$2 million of mortgage debt forgiveness on a principal residence. For businesses, tax breaks that expired at the end of last year and may be retroactively reinstated and extended include: 50% bonus first year depreciation for most new machinery, equipment and software; the $500,000 annual expensing limitation; the […]

By |December 1st, 2015|tax|0 Comments

In Honor of National Philanthropic Day (November 15th 2014)…

Have you considered charitable giving as a tax planning strategy for 2014?

It’s that time of year again! As we enter into the holiday season (which based on the local Target store is now officially the day after Halloween) of festive parties, family gatherings, and of course,  gift giving, it creates a natural opportunity for those who are charitably inclined to consider yearend charitable contributions.  In addition to the philanthropic aspect of charitable giving, it also can be used as an effective  estate and yearend tax planning tool.

Most American households make their charitable gifts in cash, with the corresponding tax deduction allowed as an itemized deduction on their individual tax returns. In most instances, taxpayers may deduct up to 50% of their adjusted gross income (AGI) for cash gifts made to public charities.  For gifts that exceed the 50% threshold, the contribution deduction is carried forward for a five year period.

For those who plan on incorporating charitable giving into their estate and tax planning strategies, gifting of highly appreciated property (stock, mutual funds, real estate) can be an extremely valuable tool that is often overlooked. This tax planning strategy is derived from the general idea […]

By |November 6th, 2014|charity, strategy, tax planning|0 Comments