Last Minute Tax Planning Tips For Next Year
Listed below, are several creative, last minute tax planning tips for individuals, Independent Contractors, and small business owners. If you were not able to take advantage of the new tax credits for this year, this article will provide additional ways a taxpayer can reduce taxes, catch up on unfiled taxes and pay back taxes.
It is December and if your financial picture has changed dramatically from last year, when your estimated tax payment coupons were prepared, talk to your tax professional about decreasing your January 15th Estimated Tax payment. (If you calculate incorrectly, there may be a penalty involved, so check with your tax professional, first)
With the amount that you save, from lowering your last estimated tax payment, review the possibility of placing $5000 or more, if you are over 50 years old, into an IRA account by April 15th of next year. This will help to lower your tax liability. (Check with your tax professional, especially, if you have a retirement plan at your place of work)
Sell Worthless Stock
Review old stock purchases that you inherited or have in your portfolio, which can be sold at a lost. This way you can benefit from the $1500 (filing single) or $3000 (filing married, joint) capital gain loss.
Take Advantage of: 179 Depreciation
Review your cash flow, and determine if now would be the time to purchase office equipment, or furniture for your business. Perhaps a super fast laptop, or a new high end cell phone? (Owing a real, home business, has serious tax benefits)
Certain items purchased for business, up to $250,000, can qualify for the 179 Depreciation. This is a depreciation where all or part of the cost for qualified property, that is used for business and has a useful life of more than one year, can be depreciated in total!
Charity
Look around the house for items, clothing, furniture, appliances, computers or an old car, that can be given to a qualified charity for a tax write off. Be sure to obtain written documentation for your gifts to charity.
You will need to know, for tax purposes, when you purchased the items, and for how much, the fair market value of the items on the day you donated them to charity and the name and address of the charity.
If all else fails, than just bite your tongue and write a four figure deduction to your favorite charity. If your cash flow will not allow a four figure donation, any charity will be more than happy to accept whatever amount you can space.
Preparing for an IRS Installment Agreement
If you know you are going to owe the IRS and you don’t have the money to pay, consider opening a special checking account, to make electronic, installment payments to the IRS. Your tax professional will complete the Installment Agreement Request, or you can find it in your store bought or download tax software, when you complete your taxes.
Remember, the IRS’s penalty and interest can be harsh. It is always better to pay as much as you can, and borrow the balance.
Have Not Filed Previous Year Tax Return
If you have been depressed and have not filed your last year’s tax return, speak your doctor ASAP. Ask for help.
There are two reasons for this suggestion. 1) You will need documentation, to present to the IRS, to show that you were depressed. Once this is establish, you may be able to ask that your penalties be reduced, due to illness.
2) The second reason to see your doctor is: He/she may be able to provide assistance, in helping you, to, help reduce your fears and generate the energy, necessary to gather your paper work to file your past due tax returns.
Cassandra Ingraham is a Tax Accountant and Instructor for Basic Tax Classes in the San Francisco Bay Area. She works with http://TaxesWillTravel.com an online tax service where tax payers can get help with filing extensions, past due tax returns, and IRS Installment Agreement Request.
Visit now, sign up for the weekly tax joke reminder and stay up to date with new and upcoming tax laws. http://TaxesWillTravel.com
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