2015 is almost over but there are still some ways to make the best of your tax situation before New Year’s is here. Spoiler-number 6 is the most important!
1. Do your 2015 bookkeeping now. If you aren’t current with your bookkeeping, now is a great time to catch up. You can’t know what your tax situation looks like if you don’t know what your income – or loss – is for the year.
2. Run bonus payroll. If your company is sitting on some cash consider running a bonus payroll. Didn’t make those quarterly estimated tax payments? Put all or part of the bonus to federal withholding to help catch up what you owe.
3. Set up a retirement plan. If you own a small business there are some easy ways to put away money for retirement. SEP and Simple IRAs make a lot of sense for micro and small business owners. There aren’t a lot of paperwork headaches or complicated filings required, and the contributions are tax deducible to the business. This is another good move if your company has some cash at the end of the year.
4. Buy equipment. On the fence about purchasing a computer or other office equipment? Take advantage of Section 179 and fully deduct big ticket items (aka fixed assets) in 2015, even if you only have them for a few days. Right now the deduction is limited to $25,000 but congress might change this.
5. Spend some money. Buy supplies and other business related items now for next year. Spend the money now and take the deduction now.
6. Find a fantastic CPA to work with. CPAs can do so much more than prepare tax returns! My firm offers a wide range of services such as bookkeeping, contract controller and CFO, financial modeling, and more. Take a look at my packages and services. Contact me for a free consultation!
Hopefully, you have been doing the responsible thing and putting away a nice little nest egg in retirement plans such as pensions, profit sharing plans and individual retirement accounts (IRAs). If you did, resist the urge to take money out of those accounts before your turn 59½. For starters, the money you withdraw will be taxable to you. Additionally, it is subject to a 10% early-withdrawal penalty. It’s an IRS “red flag” to forget to include that 10% penalty and increases your chance of an audit.
There are some exceptions to this early-withdrawal penalty. The penalty does not apply if you are disabled, distribution is due to the taxpayer’s death, or benefits are paid out as an annuity over the remaining life expectancy. It also does not apply to IRS withdrawals for educational expenses, certain home-buying expenses, and unreimbursed medical expenses in excess of 7.5% AGI.
If 2013 came and went and you did not manage to put away money for retirement, you may be in luck. If you have an individual retirement account (IRA) or a Roth IRA you can make your contribution up until you file your 2013 taxes, including extensions. This gives you a little extra time to knock this important item off of your to-do list. The contribution limits for 2013 were $5,500 ($6,500 if you are over 50).
I am so excited to share with everyone the post I wrote for Kveller.com! This post is about 529 savings plans for paying for education. Find the article here. Follow Kveller on Facebook or Twitter. Watch for additional posts from yours truly!!!