- Make Sure the Year is Balanced
If you’ve been the diligent type, then it’s time to make sure that all of your receipts and records even out before January 1st gets here. If applicable, you can begin distributing 1099 and W-2 forms. It’s also a good idea to reconcile your notes payable to keep up with debts owed, as well as any remaining payroll items for the year.
- Utilize a Checklist
While many rely on a series of sticky notes plastered all over their computer screen, a dedicated tax checklist will speed the process along and help keep you focused and organized. How many times have you thought that you were finally finished, only to realize you left something out? A checklist is easy enough to make, and you can find a template online for one of these with a quick search.
- Take Advantage of Gifts
Each individual can give up to $14,000 annually as tax-free gifts. If you have someone who 's hard to buy for on your Christmas list, cash is always appreciated. Just ensure that you’re giving it to them correctly and not accidentally breaking the rules. Speaking of giving, make sure you have records of all charity contributions for the year. By having them recorded now, it will save a ton of time later, and will give you a better idea of what you're you’re going to owe.
- Utilize Your Retirement
Each year, if you have a Roth IRA retirement account, you can place $5,500 tax-free into your account. Because Roth IRAs are not taxed until after the money comes out, you can potentially rack up a ton in savings before the IRS gets to touch it. As with any investment account, there are many stipulations, so it’s best to meet with a financial advisor before going nuts trying to max out your account. The good news is that if you have a traditional IRA, converting to a Roth IRA account is easy enough to do.
The end of the year a terrific time to sock additional funds into a 401(K) or other retirement funds if you have one. If you don't have a retirement account, now is a good opportunity to begin one. Many retirement accounts can reduce your taxes owed, or at least incur a deduction. As always, it’s best to meet with an expert to find out the exact rules for your state.
- Don’t Wind Up a Scrooge
Some people think that tax-free gifts can be used to pay for expenses such as tuition and medical costs. While there may be some exceptions, the general rule is that these types of payments, especially to health insurance providers, must be paid directly. On the other hand, make sure that the individual(s) you intend on gifting money to is eligible to receive them. The worst gift of all is thinking you’re getting some extra spending money, only to have to pay it back to Uncle Sam later.
- Know Your Tax Bracket
It’s always good to know your tax bracket, particularly if you are an employer. Employers belonging to higher tax brackets not only incur certain surtaxes but are also subject to Medicaid and other withholdings to consider as they reconcile their year-end taxes.
Having an idea of what your tax bracket requires will help you determine what you can contribute to retirement funds, as well as what you can give away as charity and gift contributions. Knowing what you will owe now will make it easier to submit later on. And, considering it may be a different bracket from the last filling, it never hurts to discover it as you’re thinking about taxes.
- Know the Ins and Outs of the AMT
The AMT, or the Alternative Minimum Tax, is as expensive as it is confusing. While the AMT was started to make sure wealthier fillers didn’t get out of paying their fair share via loopholes (like Donald Trump so famously bragged about), it could, almost 50 years later, wind up costing you a ton without you even realizing it.
With the myriad of tax laws and tax rulings on business owners, it's always best to speak with a tax expert regarding what's best for your specific business type and industry. Remember... a free consultation today, may save you a bundle tomorrow. Schedule a meeting with one of our tax experts today!