Several end-of-year tax planning strategies are available to business owners that can be used to reduce their tax liability. Let’s take a look:
Businesses using the cash method of accounting can defer income into 2021 by delaying end-of-year invoices so that payment is not received until 2021. Businesses using the accrual method can defer income by postponing the delivery of goods or services until January 2021.
Purchase New Business Equipment
Bonus Depreciation. Businesses are allowed to immediately deduct 100% of the cost of eligible property placed in service after September 27, 2017, and before January 1, 2023, after which it will be phased downward over a four-year period: 80% in 2023, 60% in 2024, 40% in 2025, and 20% in 2026.
Now that the Tax Cuts and Jobs Act (TCJA) is in full swing, many of you have been clamoring for tax planning strategies. This post addresses some essential aspects of the TCJA and suggests some strategic implications to be used for planning purposes.
One of the most significant changes coming out of the TCJA are the new tax rates:
- The individual tax rate is reduced to a maximum 37%.
- Tax rate for a pass-through entities can be reduced by 20%.
- The corporate tax rate is reduced from 35% to as low as 21%.
As a result of these new tax rates there is a growing debate over whether a business should be organized as a pass-through entity or a full blown ‘C’ corporation.
Families with multiple businesses in various life cycle stages are compelled to think very carefully about tax implications associated with their ‘portfolio’ of business entities.
Tax planning involves a wide range of strategic decisions and implementations which affect your overall estate plan. In fact, there is arguably no other area of law that is more complex and that contains as many guidelines as the U.S. tax law. In addition, there are also State and Local Tax laws (SALT). The impact of SALT has become even more significant ever since the passage of the Tax Cuts And Jobs Act, primarily because the legislation now limits the SALT deductions to only $10,000.
The understanding of such complicated set of rules is a fundamental key to tax planning. Proper tax planning is a proactive measure that one takes to arrange and rearrange their finances in order to limit his or her tax liability to the lowest amount allowed by law. The confusion often arises because people often make the mistake of thinking that by hiring somebody to file their taxes they are engaging in proactive tax planning. However, the filing of tax returns is usually a reactive activity, not a proactive one.
The key to a legal and successful reduction in your tax liability is planning. We don’t just comply with tax procedures but we also recommend proactive tax saving measures to maximize your income after tax deductions.
We take it upon ourselves to master the current tax laws, new tax rules and the complicated tax codes by frequently attending tax seminars. Read More
It is not unknown for people to suffer a loss in the form of theft and casualty for their personal properties. If you are one of them, you can claim the same as itemized deduction for your tax returns. To do so, you need to fill up the Form 4684 to understand how much of yours loses you can report and then mention the same in the Schedule A of the Form 1040.
It is important to note that you can claim only for those losses that are not covered or reimbursed by any insurance company. Also, in order to qualify for the deductions, your loss should amount to more than 10% of your adjusted gross income. You cannot claim a deduction otherwise. Read More
Many overseas destinations welcome young Australians to live and work. For the best and brightest of Australia’s young, the expat experience is a rite of passage.
However, the best and brightest young Australians often have a HELP debt or Trade Support Loan (TSL). A visit to the Australian Taxation website shows your HELP and TSL debts are a trailing shirt tail that forever ties you to your home until they’re paid off.
What are the proposed tax changes to private corporations that the Canadian government made in July 2017 and what do these changes mean for my company?
On July 18, 2017, the Canadian government proposed tax changes in an effort to remove tax advantages that small business owners have and address aggressive tax planning strategies involving the use of private corporations. These proposed changes are open for discussion until October 2, 2017, before being formally submitted for legislation. Read More
A prospective client called a few weeks ago to discuss his tax situation. He sold his business in 2016 and was very unhappy with his income tax bill. He asked, “Can you lower my taxes? Did the return preparer calculate my taxes correctly?” After a brief review of his sales contract and the return prepared for him, the answer was clear. The return was prepared correctly. However, wise tax planning when he started his business about ten years ago, or even a few years back, would have saved him a very large sum of money when he sold his business.
One thing to be be thankful for this holiday season is that the tax ‘policies’ of President Elect Trump and our Republican friends in the 115th congress will keep tax accounts and bookkeepers gainfully employed well into the foreseeable future. In fact I am adding staff again, which ‘sounds’ great!
Is it good for the US though – from a wonky economic perspective – that tax practitioners are expected to be in high demand well into the foreseeable future? Perhaps, perhaps not.
(3-Part Webinar Series – Have Your 2017 Marketing Plan Ready Before Christmas – 12/7, 12/14, and 12/21)
You are invited to join this webinar if you want to build out your entire marketing plan for 2017! Monika Miles will be leading this super smart webinar that will result in your having your 2017 Marketing Plan in place before Christmas.
September 19 is just on the other side of the weekend. There’s not much time left to sign up for this Tax Planning Seminar.
Networking Seminars one day technical update on Tax Planning for CFCs under Subpart F Income. One of the purposes of Subpart F is to prevent CFCs from structuring transactions in a way that are designed to manipulate the inconsistencies between foreign and U.S. tax systems to inappropriately generate low or non-taxed income on which U.S. tax may be permanently deferred.