Here are some tips for planning last minute tax savings for business tax payers.
As always there are ways to tweak your 2013 tax bill, but not very much time left to do so. Before making any decisions please see my last post “Wag The Dog: Don’t Let The Tax Tail Wag The Financial Dog!” and keep those items in mind.
There are numerous new rules that kicked in 1 Jan 2013 and more that will be coming into play for 2014. Remember these are as of today and we never know what changes in legislation will be passed at the last minute (or in last years case after the last minute).
One of the biggest changes for businesses has to do with depreciation of business assets put into service in 2013. Businesses have grown accustomed over the last several years to the very lucrative rules allowing up to 100% bonus depreciation of new items placed into service. That has gone away completely for 2013 and future years. Other depreciation related changes include things not going into effect until 1 Jan 2014 such as the dramatic drop in the amount of allowed Sec 179 expenses, the loss of the shorter recovery period for certain improvements, and the changes in capitalization rules.
Of course, the big topic of the year is the Affordable Care Act and the rules going into effect for 2014 that will mean changes to credits, reporting procedures, and mandates for employers and employees alike. This topic is way to broad to cover in a short blog like this and there is a wealth of information on other tax professionals blogs on this site. Simply scroll down the page and look at the archives on the right side of the screen.
Other big items that changed in the beginning of 2013 for businesses were the expiration of Work Opportunity Credit, the reduced built in gains recognition period for S Corporations, and the new net investment income tax of 3.8% for upper income thresholds. This includes income from pass-through entities like S Corporation and Partnerships.
As you can see there are lots of things to take into consideration when planning your end of year tax situation. Now is a great time to call your tax professional and schedule a sit down to do that as well as get things in line for next year.
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