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The end of the year is rapidly approaching. That means now is the time to consider your tax situation and the steps you could take to lower your 2013 tax liability. Here are a half-dozen options that might fit your situation.
1. Review your investments and start thinking about offsetting gains and losses for the year. You can deduct $3,000 of losses against ordinary income. 2. Be sure you set aside the maximum allowed in your retirement plans. This year you can put $17,500 in a 401(k) plan, $12,000 in a SIMPLE, or $5,500 in an IRA. Additional amounts can be contributed if you're 50 or older. 3. December 31 is the deadline for taking a 2013 required minimum distribution from your traditional IRA if you're 70½ or older. Miss this requirement and a 50% penalty could apply.
4. Start a retirement plan for your small business. You may be entitled to a tax credit of up to $500 in each of the plan's first three years. 5. Buy needed assets for your business before year-end to utilize the first-year expensing option (Section 179) of up to $500,000 for 2013. New asset purchases might also qualify for 50% bonus depreciation. 6. Install energy-efficient improvements to your home; you might qualify for a lifetime tax credit of as much as $500. Solar improvements such as water heaters or panels may be eligible for a credit of up to 30% of the cost. For a more complete look at ways to cut taxes in your particular circumstances, call my office for a year-end planning appointment. |
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These days we need to do all we can to boost our retirement savings, and tax breaks can be a big help. Using a traditional IRA to build your nest egg is a great idea. Just be sure you don't make any of these common IRA mistakes.
THE WRONG INVESTMENTS. Don't put tax-free investments, such as municipal bonds, in an IRA. You'll end up paying ordinary income tax on money that wouldn't have been taxed, or you'll sacrifice earnings for a tax benefit you'll never receive. NO CATCH-UP CONTRIBUTIONS. Be aware that if you're 50 or older, you can contribute an extra $1,000 to your IRA each year.
THE WRONG BENEFICIARY. Your choice of beneficiary can affect how quickly IRA funds must be distributed. The longer money stays in an IRA, the longer it grows tax-free. EARLY WITHDRAWALS. You'll pay regular income tax as well as a 10% penalty on early withdrawals from your IRA unless an exception applies. Early withdrawals are those you take when you're under age 59½. MISSED RMDs. You are required to take distributions from your IRA when you reach 70½. You have until April 1 of the year after you turn 70½ to begin withdrawals. The penalty for withdrawing less than the required amount is 50% of the shortage.
IRA mistakes can be costly. If you'd like answers to your IRA questions, give me a call. |
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Keeping track of deductible expenses is smart, but tracking your qualification for tax credits is even better. Tax credits work much like tax payments; that is, they offset your tax liability dollar for dollar.
Here's an illustration: Suppose you owe $750 in federal income tax. If you're eligible for a $500 credit, you'd subtract that from the $750 to arrive at your final tax bill of $250. The tax code is full of tax credits, both for individuals and businesses. Here are just a few: * Education credits * Child and dependent care credit * Child tax credit * Adoption credit * Foreign tax credit * Research credit * Energy credit * Credit for the elderly * Retirement savings contribution credit * Alternative minimum tax credit * Disabled access credit * Health insurance credit * Pension plan startup credit * Work opportunity credit Most tax credits have specific requirements, and many are subject to income limitations. Don't overlook tax credits in your tax planning; find out how to qualify for those that could reduce your tax bill. |
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You might think tax filing time is over for 2013, but that's not necessarily the case for many taxpayers. There are several important tax deadlines in October. Check the list below to see if any of them apply to you or your business.
October 1 - Deadline for self-employed individuals and small businesses to establish a SIMPLE retirement plan for 2013.
October 15 - Filing deadline for 2012 individual income tax returns that received an extension of the April filing deadline. October 15 - Deadline for undoing a 2012 conversion of a regular IRA to a Roth IRA and switching the Roth back to a regular IRA without penalty. If you need more information or filing assistance, contact my office. |
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Tax Tip of the Week: The Tax Tip this week deals with education credits and the different options availabls. Check out this article for important info you need to know for the credit available.
Business Tip of the Month: First impressions count when your customer arrives at your business for the first time. Is it an inviting setting, is it clean and organized, are your employees friendly and welcoming? Read this article for some tips on how to make your customer want to come back to your business. Financial Tip of the Month : Do you think that you're property taxes are too high? With the fluctuating real estate prices over the last decade it's possible that you are paying too much property tax. Read this article to see if you qualify for submitting an appeal to have your rate reduced.
Fraud Alert: Are you planning on hiring a moving company in the near future? Apparently there are moving company scams to be aware of!! Read this article for tips to be aware of when seeking out a company to move your belongings. |
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Let me know if I can help you with any Quickbooks problems.
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https://www.facebook.com/pages/Linda-L-Heineman-CPA/266124360085715?ref=tn_tnmn
Sincerely,
Linda Heineman
Linda L. Heineman, CPA
email:
linda@llhcpa.com
phone:
626-577-0979
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