Only 10 Days Left for 2017 Tax Deductions
Article Highlights:
- You can still take action to reduce your 2017 tax bill.
- Such actions must be completed before the end of 2017.
- Deductible expenses paid by credit card are deductible in the year they are charged.
That date is only 10 days away. Although many businesses, charitable organizations and government offices will be closed for a long New Year’s holiday weekend, you still have time before then to make charitable contributions and pay deductible taxes. If you have a child in college, you can also check to see if you have paid at least $4,000 in tuition and qualifying expenses for that student during 2017. If not, you are permitted to prepay for the first 3 months of the next year’s tuition and count that payment toward your 2017 tuition credit. However, before you do that, please call this office to make sure that this strategy is beneficial for you based upon the tuition amount and your income level.
If you own a small business and make a business acquisition before the end of the year, you can generally expense (write off) the entire cost. However, business acquisitions must actually be placed in service before their expenses are deductible. Thus, do not expect a deduction on your 2017 return if you take delivery after the end of the year—even if you paid for the item in 2017.
A charitable contribution to a qualified organization is considered to have been made at the time of its unconditional delivery; for donations made by check, this is the date that the check is mailed. If you use a pay-by-phone account, the date when the financial institution pays the amount is considered to be the date when you made the contribution.
If you are short on cash, keep in mind that purchases or contributions charged to your credit card are deemed to be purchased when the charge is made.
If you have an overall capital gain for the year so far, you can check with your broker or conduct your own review of your portfolio to find losers that you could sell before the year ends to offset your gains; you could even come up with a net $3,000 loss that could be tax-deductible. Of course, these transactions will need to be completed before the last trading day of the year.
As a reminder, property taxes and both state and local income taxes may no longer qualify as itemized deductions next year, so if you have the funds available, it might be beneficial for you to prepay, before the year ends, the upcoming installment of your home’s property taxes. If you are paying estimated state taxes, you can also pay your 4th-quarter installment before the end of the year.
We wish you a happy New Year and look forward to assisting you with your tax-preparation needs during the coming tax season!
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“Bernard and his team at BR tax group are top notch. This is my first year using them after switching from a different local CPA and I didn't realize how much tax info I've been missing. His communication is great. The additional information he provides to maximize tax savings is something I didn't get from my previous CPA. Thanks Bernard”
Frequently Asked Questions
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You can prepare your taxes yourself, especially if your business is simple.
But once you have contractors, employees, business loans, equipment purchases, mileage, mixed expenses, or growing revenue, things get more complex. At that point, tax preparation becomes a way to make sure your business is reported correctly, your deductions are handled properly, and your records can support what you file.
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Send anything that shows what your business earned, spent, bought, paid, borrowed, or changed during the year.
That usually means your income records, bank statements, credit card statements, payroll reports, contractor payments, loan documents, mileage records, and prior-year tax return. Also tell me about anything unusual, such as buying a vehicle, hiring someone, opening a new location, or taking out a business loan.
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Messy books can slow things down. If expenses are in the wrong categories, transactions are missing, or personal and business spending are mixed together, your tax return may not show the right profit. We may need to clean things up before filing, so your return is accurate and easier to support.
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Possibly, if it was truly for your business and you have proof.
Still, it is much better to avoid this when you can. A separate business bank account and business credit card make everything cleaner. They save time, reduce confusion, and make your records much easier to defend if anyone ever asks questions.
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Most small business owners can deduct ordinary business expenses like software, advertising, supplies, insurance, rent, payroll, contractor payments, professional fees, travel, and some vehicle costs.
The question I usually ask is simple. Was this expense clearly for the business? If yes, we can look at how it should be handled. Personal expenses should stay personal.
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