Getting last minute tax advice can be taxing
By dave thomas
While most people are starting to turn their attention to holiday shopping, time off from work and how much their credit cards will expand over the next two months, it behooves both consumers and business owners to have one eye on their taxes.
With some last-minute moves, both consumers and business owners can save some money on what they owe come next April or increase the size of their return. The key, however, is making those moves — in many cases — prior to Dec. 31 or before next April 16.
While the holidays are undoubtedly on many individual’s minds, getting a jump on April 15, 2012 can be the best gift one could have. For the consumer, here are some things to keep in mind:
Stock up on savings
For those individuals, and there are likely many of them, who had investment losses in 2011, they can recoup some of their setbacks. Individuals can offset any capital gains with their losses, while also offsetting things like wage income with their losses (up to $3,000 a year or $1,500 if filing married/filing separately). This assists in lowering one’s taxable income.
Think of your future
For those individuals who have not maxed out their retirement account contributions for a traditional 401(k) or IRA, they can add more pre-tax dollars and receive a tax decrease, thereby lowering their taxable income. Individuals with a health savings account can also add more to it and claim a tax deduction at the same time.
Make it your business to record information
Individuals should also make sure they have been recording business expense deductions for 2011. Whether it was business travel or purchasing supplies for a home-based business, make sure you have the numbers in place.
Too often, consumers doing work-related ventures forget to mark down this trip or that trip, this purchase or that purchase, leaving unclaimed deductions sitting on the table.
Great time of the year to be charitable
With the holidays just around the corner, it makes a great time of the year to be charitable if one has not donated already. Contributions to different charities, churches, Goodwill, etc. can be deducted. The important thing is to keep all receipts and records of such donations.
As for business owners, here are some things to keep in mind:
Record business-related purchases All businesses over time need new equipment, etc. so be sure to properly record all transactions. In many cases, buying things like furniture, computers, printers, company vehicles, etc. can qualify businesses for deductions.
As part of the Small Business Jobs and Credit Act signed by President Obama, and for the 2011 tax year, Section 179 of the tax code permits a deduction of up to $500,000 for qualified acquisitions of up to $2 million. The bottom line is many small and medium-sized companies that make acquisitions by year’s end could find themselves eligible to deduct the majority of their business purchases.
Late year hires make sense
Along with adding staff for the New Year where needed, making late year hires allows many business owners to be eligible for credits. Business owners should look to the Work Opportunity Tax Credit, which was extended to Dec. 31, 2011, to see how it could benefit them. To be eligible under the WOTC program, a new hire must have started work for an employer after Dec. 31, 2006 and prior to Jan. 1, 2012;
Are you in a giving mood?
For those business owners who choose to give bonuses, there are opportunities to record a deduction for the present tax year for bonuses in fact paid the next tax year. Holiday gifts and parties may also be deductible provided they are not routinely/frequently given and are solely done with the idea of promoting goodwill.
Make it a healthy year for employees
For those small businesses that pay at minimum half of their employee’s health coverage, they can become eligible for a sizeable tax refund.
The maximum credit is directed to companies with 10 or fewer full-time workers who have average annual earnings of $25,000 or less. The tax deductions ends for businesses with 25 employees or that pays average wages greater than $50,000.
Although next April’s tax deadline day may seem like it is far in the future, it will be here sooner than you realize. Getting a jump now on next April’s deadline can be the greatest gift one can receive this holiday season.