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Showing posts from December, 2015

Year End Tax Moves to Reduce Business Profits

Here are some tax planning strategies to help you reduce profits for the year and thus reduce the taxes you will pay you. (Keep in mind if you want to accelerate profit into this year do the opposite of the strategies listed below)

Delay Revenue If your business is an accrual basis tax reporting business delay sending out invoices until next year. For a cash basis tax reporting business delay receipt of income. You may need to call people you have already invoiced to request that they make sure you don't receive their payment before the year end. In reality they can send you a payment before year end and you could receive it after year end so this could benefit both you and your clients/customers.

Accelerate Expenses On the Expense side for an accrual basis tax reporting business make sure you enter all the bills you receive before year-end and make sure they are dated this year. For a cash basis tax reporting business pay as many bills by year-end as possible. If cash is tight m…

Why January 15th Is An Important Date for Your U.S. Taxes

Nobody likes to pay taxes and penalties on taxes are even worse. On your personal form 1040 for your U.S. Taxes you must not only pay enough tax but you must also pay it in a timely manner or pay a penalty. The date you must pay enough tax in to the IRS to avoid an underpayment penalty is typically January 15th. Below is a quote from IRS publication 505 on the subject:

If you did not pay enough tax, either through withholding or by making timely estimated tax payments, you will have underpaid your estimated tax and may have to pay a penalty.


So what is the rule for the Underpayment Penalty (not to be confused with the Late Payment Penalty :~/  ) Below is the General Rule from IRS publication 505 for 2014 taxes:
General Rule
In general, you may owe a penalty for 2014 if the total of your withholding and timely estimated tax payments did not equal at least the smaller of: 90% of your 2014 tax, or 100% of your 2013 tax. (Your 2013 tax return must cover a 12-month period.) Did you catch it. The…