Year-End Tax Tips for Small Businesses
As 2014 comes to an end, your 2015 tax preparation is just beginning! Karen Stern, partner in charge of BSW Small Business Services, discusses end-of-year tax preparation in this month’s “Financial Fitness,” as featured in Small Business Monthly.
While navigating end-of-year tax preparation isn’t the easiest journey you’ll take, it can result in plenty of opportunities for your small business. As 2014 winds down, take a look at some of these year-end tax tips to ensure you start 2015 on the right foot!
- Be aware of expiring tax breaks. Many tax breaks that expired Dec. 31, 2013, have not been revived by Congress, leaving many unsure of which tax strategies will be appropriate this year.
- Defer tax. Accelerating or deferring income where possible might save, or at least defer, tax.
- Bunch itemized deductions. Bunching itemized deductible expenses into one year can help you exceed the necessary 2% adjusted gross income floor for miscellaneous expenses, allowing you to deduct them from your income.
- Check your withholding. With taxes due throughout the year, use this time to check your withholding and estimated tax payments now so you can address any potential penalties through increased withholding.
- Increase your retirement contributions. Contributions to traditional retirement accounts reduce taxable income at the time that you make them, and you don’t pay taxes until you take the money out at retirement.
- Consider a Roth IRA rollover. Converting a traditional IRA into a Roth IRA allows you to pay tax on the conversion in exchange for no taxes in the future.
- New home office deduction safe harbor. You can deduct some of the cost of your home if you use it as your principal place of business or if you meet clients in your home.
- Maximize “above-the-line” deductions. Above-the-line deductions are taken before you calculate your adjusted gross income and make it less likely that your other tax benefits will be limited.