As a self-employed person, you have more control over your possible tax debt. someone who earns income as an employee
To take full advantage of this additional control, follow these tax planning tips 5 year end:
1. Estimate your business income
It is absolutely essential that you discover where you stand on the tax -. Before taking other tax planning initiatives
You do not want to spend money, for example, in a year when we did not need the deduction.
If you plan to be in a bracket higher this year or next imposition, you'll want to take as many deductions as possible in the year you are subject to the tax rate higher.
Unless you think your business income, Tax Planning is guesswork at best.
2. Check your liability for the Alternative Minimum Tax (AMT)
Tax planning usually means finding more deductions and postponing income -. But not always
You may want to do exactly the opposite if you may lose some deductions because of the alternative minimum tax.
on alternative minimum tax is a parallel tax system that calculates your tax without the benefit of certain tax benefits, such as substantial itemized deductions.
If your income tax calculated by the rules of the AMT exceeds your tax under the normal tax rules, you pay the excess as AMT tax.
3. Time your income
You can not defer income simply by not cashing checks that come to you, or telling clients not to pay you before the end of the year.
income is generally taxable when it is available for you.
However, you may billing time at the end of the year to your advantage. You can certainly sell assets at a gain before or after the end of the year, depending on your tax situation.
4. Time your expenses
There is always a strong increase in business equipment sales at the end of the year -. And it is not entirely because computers and printers are a popular holiday gift
If you buy commercial assets on December 31, you can begin to depreciate this fiscal year. You might even be able to take a deduction Section 179 and charges the full cost of the asset in a year.
Business spending are counted as made in the year you buy them, even if you use a credit card or other deferred payment scheme and not pay for expenses until the year next.
on the other hand, if you are based on money, pay bills can help reduce your bill this year.
do not bother to buy inventory or supplies that will be part of the inventory before the end of the year, unless you need them. You generally do not deduct the cost of inventory until you sell the product.
5. Contribute to retirement plans
Yes, you have until you file your return next year (15 April) to contribute to your IRA in September
The earlier you contribute to your pension plan, however, more time to work in your favor.
Furthermore, it is generally easier to make several smaller contributions that large.
When do you start thinking about reducing the tax this year bill?
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