Year-end Tax Tips
A little planning could save a lot in taxes. Here are a few strategies individuals and businesses can use to help lower their 2013 tax bills.
Contribute to your retirement savings. To help with this year's taxes, increases to your 401(k) plan salary deferral must be made during 2013. However, you have until April 15, 2014, to make deductible contributions to an individual retirement account - if the deduction is available to you.
If you itemize, make deductible payments in 2013. These potentially would include contributions to charities (even by credit card) and your last state income-tax estimate typically due in January. Be sure to consider possible alternative minimum tax (AMT) exposure before prepaying state taxes.
Pay sales tax early. If you will be deducting state and local sales taxes instead of income taxes, making a big-
ticket purchase like a car for personal
use before the end of the year could increase your deduction.
Make the most of the standard deduction. If your itemized deductions are roughly equivalent to your standard deduction, you may be able to "bunch" deductions by paying certain deductible expenses (such as mortgage interest, state income taxes, or real estate taxes) late in 2013 so that you can itemize, and then, in 2014, when your deductible expenses are low, take the standard deduction.
Contribute to your HSA. If you have a health savings account (HSA), consider making a contribution. Contributions for 2013 may be made until April 15, 2014. And, subject to applicable limits (generally, $3,250 for self-only coverage, $6,450 for family coverage, plus $1,000 for eligible "catch-up contributions"), a year-end or early-2014 contribution can provide an appreciable deduction for 2013. The money can be saved for future medical expenses, and if your HSA permits it, you may invest the contributions during the interim.
Equipment purchases. Buy business equipment and place it in service before
the end of the year if doing so will generate a write-off under Section 179. (For 2013, the maximum Section 179 deduction is generally $500,000, but in 2014, that number will decrease to $25,000.) Additionally, for most types of equipment, the generous 50% bonus depreciation rules will expire at the end of 2013.
S corp losses. If you are an S corporation shareholder, you should make sure you have enough "basis" to deduct your share of any loss that you anticipate your corporation will pass through to you. To increase your basis, you can loan the company money or make a capital contribution before year-end.
Year-end purchases. Buy office supplies and renew subscriptions before the end of the year if the expense will be deductible.
Revenue recognition. For cash-method businesses, time late 2013 customer billings so that payments won't be received until 2014. For accrual-method businesses, designate large, late-year shipments of products "FOB destination" rather than "FOB shipping point" so that title won't pass until 2014 and the corresponding revenue won't be realized in 2013.
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Bonuses. If paying discretior year-end bonuses to employe possibility, determine whethe will pay bonuses during 2013.
Luxury auto depreciation limits. If bonus depreciation expires in 2013 as scheduled, so will the generous limits on first-year depreciation available for new business autos, light trucks, and vans. Consider accelerating any anticipated purchases.
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If you have any questions concerning these strategies, please contact us. We can hel you find the right strategies for your particular tax situation.
12 Employers: Deferred due date for Form 941, if timely deposits were made.
16 Corporations: Pay fourth installment of 2013 estimated tax.
15 Individuals: Pay last installment of 2013 estimated tax with Form 1040-ES. Or file 20134ncome-tax-return and make-full payment of any balance due by January 31, 2014.
31 Employers: Distribute copies of Form W-2 for 2013 to employees.
31 Businesses: Distribute Forms 1099 (or other information statements) to recipients of certain payments made in 2013. See us for more details.
31 Employers: File Form 941, Employer's Quarterly Federal Tax Return; quarterly deposit due.
31 Employers: File Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, for 2013.
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