12 Tips for Year End Tax Planning

12 Tips for Year End Tax Planning

Right now is the best time for year-end tax planning that might help lower your tax bill.  Here are 12 tips to consider using for your business and personal tax returns before ringing in the new year.

Year-end tax planning for business:

  1. Invest In Your Property
    • Consider making business expenditures that qualify for the business property expensing option (example: computers, furniture & fixtures, etc.).
  2. Move Up Your Timetable
    • Consider making business expenditures that qualify for 50% bonus first-year depreciation if bought and placed in service this year.
  3. Be Profitable Now, Save Money Later
    • A corporation that anticipates a small net operating loss for 2016 may consider accelerating 2017 income to create a small amount of net income for 2016.  This will permit the corporation to base its 2017 estimated tax installments on the relatively small amount of income shown on its 2016 return, rather than having to pay estimated taxes based on 100% of its much larger 2017 taxable income.
  4. Don’t Unwrap That Gift Quite Yet
    • Consider deferring debt forgiveness and cancellation until 2017 to reduce its application as income to next year
  5. Harvest Those Business Losses
    • Consider disposing passive activity in 2016 (investments you don’t participate in) if doing so will allow you to deduct the suspended passive activity losses.

Year-end tax planning for individuals:

  1. Harvest Those Personal Losses
    • A great way to save on capital gains taxes is to harvest your capital losses from investments that have lost value over the course of the year.
  2. Move It Into 2017
    • You can postpone income until 2017 and accelerate deductions into 2016 to lower your 2016 tax bill.  If you have a bonus coming to you It might be advantageous to arrange with your employer to defer payment until early 2017
  3. Credit Card Accepted
    • Consider using a credit card to pay for deductible expenses before the year-end.  Doing so will increase your 2016 deductions even if you don’t pay your credit card bill until after the end of the year.
  4. Pay It Forward
    • If you expect to owe state and local income taxes when you file your return next year, consider asking your employer to increase withholding of state and local taxes before year-end to pull the deduction of those taxes into 2016.
  5. Planned Medical Expenses?
    • Think about increasing the amount you set aside for next year in your employer’s health flexible spending account (FSA).
  6. Max Out 2016 Healthcare
    1. If you become eligible in December of 2016 to make health savings account (HSA) contributions, you can make a full year’s worth of deductible HSA contributions for 2016.
  7. Go Green While It Pays Green
    1. Thinking about making those energy efficient improvements?  Do so before the close of 2016 to be eligible for the nonbusiness energy property credit.  The credit might not be available after this year.

These are just a sample of the decisions you can make to minimize your 2016 tax liability.  If you have any questions, we’re here to help.  Let’s connect before December 15, 2016 to ensure that you have enough time to enact your tax savings plans.


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