By Lou Ann Taylor You have probably heard the phrase many times, “timing is everything”. Good timing is the difference between success and failure whether you are a salesman, chef, musician or business owner. Everyone knows how costly bad timing can be with the stock market, but bad timing can also be costly at tax time, without prior planning.
As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill for this year and possibly the next. Last year Congress made many expiring tax provisions permanent, but there are a number of others that will expire at the end of 2016. Some may be extended, but that is to be determined.
These expiring tax breaks include:
1) The exclusion for discharge of indebtedness on a principal residence;
2) The treatment of mortgage insurance premiums as deductible qualified residence interest;
3) The 7.5% of AGI floor beneath medical expense deductions for taxpayers age 65 or older;
4) The deduction for qualified tuition and related expenses;
5) Many of the energy efficiency improvement credits.
As a general rule, individuals and businesses alike can benefit from accelerating deductions and deferring income, harvesting investment losses to offset gains, donating to charity, and avoiding estimated tax penalties by making quarterly estimates or increasing withholding. We have a checklist of other tax savings ideas for individuals and businesses which are available for download: Tax Saving Strategies for Businesses and Tax Saving Strategies for Individuals.
Last year Congress also made several changes that affect timing as it applies to income, payroll, not- for-profit, and information tax return filing deadlines. It extended the due dates for some returns while accelerating others. As William Shakespeare wrote, “Better three hours too soon than one minute too late,” so we have compiled a list of tax filing deadlines that will help avoid penalties: Tax Return Due Dates.
Planning for year-end payroll and income tax return information gathering can also help save time and ensure that you meet all your filing deadlines. Here are some helpful checklists: Year-End Payroll Checklist, Individual Tax Return Checklist, Business Tax Return Checklist, Nonprofit Tax Return Checklist.
As you close the books on 2016, take the opportunity to lay the foundation for next year. Planning, budgeting and cash flow projections can help put you in a prime position for a successful and profitable 2017.
Alerding CPA Group is available now and anytime throughout the year to help with all your accounting and tax needs. Please call to schedule a consultation and develop a plan that works for you or your business: 317-569-4181.
This post was written by:
Lou Ann Taylor, CPA, CGMA
Lou Ann is a Director of tax for Alerding CPA Group where she provides tax advice, planning and compliance. Her clients include manufacturing, warehousing and distribution, retail and convenience stores, specialty contractors and manufacturer’s representatives.
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