This Year-End Tax Plan Can Save You Hundreds

Well, ~Contact.FirstName~, December is officially with us. It’s cold. And time is running out.

By that I mean that we are just ONE MONTH away from year-end. That’s one month in which to do anything positive to reduce your 2014 income tax burden (with the exception of IRA contributions and a few other various back-dating strategies that are allowed).

So here’s a quick-and-dirty plan for doing some serious damage control on your 2014 Income Tax bill:

 

1) Pre-pay as many January, 2015 business or work-related expenses as possible without putting a serious crimp in your cash flow.

 

2) Be sure to include year-end business purchases that you put on your credit card. As long as the charge is on a bank card (i.e., Visa or MasterCard as opposed to Macy’s or Texaco) or even AMEX, you get the deduction for 2014, even though you may not pay the credit card bill until March, 2015 or later.

 

3) Begin now summarizing your business expenses for our office. If you wait until tax season is here, you will be more likely to overlook some perfectly valid deductions.

 

4) If you are at least in the market for a new vehicle, you can get a HUGE depreciation deduction if you at least have it under contract by December 31, 2014 AND if the gross weight is GOOD pounds or more

 

Even though depreciation deductions were severely cut for 2014, you can still take a first-year write-off of up to $25,000. Any equipment you acquire doesn’t have to be new either – it can be previously owned.

 

5) Do you use your personal vehicle for business? As in, other than commuting to and from your work place? And don’t forget any business mileage that your spouse may drive while you’re on the road.

 

Multiply this number by 12, subtract the result from 365 days in year, and the remaining figure should be your days on the road for purposes of figuring your per diem deduction.

 

6) Don’t despair if your records are in bad shape, or if they have been stolen, destroyed, or are otherwise non-existent. There are actually U.S. Tax Court cases that allow you to reconstruct your records or estimate your expenses using reasonable guidelines.

 

You can do this even if you simply did a lousy job of keeping up with your expenses for part of the year.

 

7) In the spirit of Christmas, consider an extra contribution to your favorite charity. This is deductible if you itemize your deductions. If money is tight, at least clean out your closets or your garage and make a non-cash contribution to, say, Goodwill or Salvation Army.
8) Also, be sure to capture cell phone cost and usage, any computer expenses, supplies and business furnishings whether used at home or another location.

 

Warmly,
Dennis Bridges
(770) 984-8008