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 Wednesday, November 26, 2008
End of the Year - Part 2
It's almost year-end, and while most of us are still scratching our heads wondering how the year went by so quickly, accountants are getting ready because year-end means that tax time is just around the corner. The good news is that there are things you can still do this year to maximize your 2008 tax planning. Always talk to a tax professional first because every company's situation is different and there may be tax savings that are more suitable for your particular company.
Section 179 is a nice benefit for businesses- especially nice for small businesses. Section 179 allows companies to deduct the full cost of eligible business equipment on the 2008 return, as opposed to spreading it across several tax years. For 2008, a business is able to expense up to $250,000 in capital expenditures provided the total purchase amount is under $800,000. Eligible property includes machinery, equipment, furniture and fixtures, most storage facilities, and single-purpose agricultural or horticultural structures.
The main goal of year-end tax planning is to increase expenses and delay income. Buy any needed equipment now. Expanding equipment cuts your adjusted gross income, lowering your tax liability. You can also pay bills like rent, insurance, and utilities early and stock up on office supplies.
If you haven't set up a retirement plan yet, now is the time to do so. Qualified plans must be established by December 31 in order to provide deductions for this year. This is a great way to lower your taxes and protect some of your income.
As this time of year is the season of giving, don't forget to be charitable. An individual can write-off between 20-50% of their adjusted gross income. Corporations can write-off of up to 10% of their taxable income. Just remember the IRS requires a written receipt for any donation of $250 or more.
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