Skip to main content

5 After Year-End Opportunities to Reduce Your 2013 Taxes



It's not too late to take action to reduce your U.S. income taxes for 2013.  Here are some post year-end tips to reduce your 2013 taxes.

Estimated Tax Payments

Paying estimated taxes, what you project you will owe, can lower the amount of the check you will write when you file your tax return.  While it won't reduce your actual income taxes it can reduce any penalty for under payment of taxes.  The estimated tax payment for the fourth quarter was due January 15th but you can still make estimated tax payments.  So you can project the amount you will owe on your taxes and send a payment in with form 1040-ES.  This can be complicated and if you need assistance I would be glad to help you as your CPA.

IRA Contributions

If you were under 50 years of age in 2013 you may be able contribute and deduct from income up to $5,500 or your taxable compensation for the year, which ever is smaller.  If you were 50 or older before 2014 your limits are higher, at $6,500 or your taxable compensation for the year and again which ever is smaller.  You have until April 15, 2014 to make your contribution. Be careful to specify to your financial adviser that the contribution is for your 2013 taxes.  

If some or all of your income is considered self-employment income, you have an additional option -- a Simplified Employee Pension (SEP) plan. You have until the due date of your tax return, including extensions, to set up and fund your SEP for 2013. In addition, you can contribute up to 25 percent of your net earnings from self-employment (backing out the contributions themselves), up to a comfortable $51,000 for 2013.

Accrual Based Business

Remember for your accrual based business you can include expenses that you incurred and were invoiced for before year-end even if they have not been paid yet.  On the other hand you also have to count income that invoiced even if you have not received it yet.

Cash Based Business

Remember too for your cash based business that any expenses you put on a credit card before year-end can be deducted in 2013.  So carefully enter your credit card transactions for 2013 into your books/accounting software.

Auto and Travel Expenses

Depending on how your vehicles have been accounted for in the past you may be able to choose between actual expenses and using the standard mileage rate to deduction your auto expenses.  In addition if you travel overnight for your business you may be able to choose between actual and per-diem expenses.  In both of these areas a little work to make sure you have records of your mileage and overnight travel may enable you to save money on your tax return.  So now is the time to review 2013 and your calander and make sure you are getting the full benefit from what the IRS allows you to deduct for your business and and un-reimbursed employee expenses.

Sometimes a little knowledge can save you some cash at tax time.  


If you want a CPA Superhero to help you leap tall building like challenges to succeed then feel free to contact me using my information below. You can have a free half hour initial consultation.



Jeff Haywood, CPA
The CPA Superhero
972-439-1955
jeff.jhtaxes@gmail.com

Follow the CPA Superhero on Twitter too at:
twitter.com/thecpasuperhero



My posts contain general information that does not fit every situation, they are not all inclusive, and as always for your tax situation everything "depends on facts and circumstances."  In addition, the information/IRS requirements are always subject to change.  So call me to talk about your specific facts and circumstances and what you want to accomplish.

Popular posts from this blog

Cryptocurrency and U.S. Income Taxes

Cryptocurrency and U.S. Income Taxes The IRS issued guidance on cryptocurrency (virtual currency or digital currency) back in 2014 and this guidance has tax implications that I will address here without getting into any political issues.

My clients that have cryptocurrencies want to know what are the tax implications. To make it complicated, or seem complicated, they acquire and use cryptocurrencies through transactions for goods and services. They also acquire and use them by buying, selling, and trading (trading between different cryptocurrencies).

Tax Consequences The guidance from the IRS is that cryptocurrencies are consider property rather currency for federal tax purposes. The implications are that receipt of cryptocurrencies for exchange of goods and services are consider revenue to the seller and potentially an expense for the buyer if it is for business use. So the recipient must report the value at the time of the transaction in U.S. dollars as revenue in the case of a bus…

Defer Capital Gains with an Investment into a Qualified Opportunity Zone Fund - Details and Strategies

How can I minimize the taxes on the sale of my business? Some of my clients are planning to sell businesses within the next year or so and they, of course, want to find ways to minimize their taxes on the sale. An investment of realized gains into a  Qualified Opportunity Fund (QOF) could help you accomplish that goal. What is a QOF, how does it work, and what are some strategies to consider? One of my clients, who is looking at potentially close to $10 million in capital gains, wasn't excited about a Qualified Opportunity Fund until we discussed the tax implications and the strategies he could use and then his eyes lit up. Investments into QOF offer a way to defer and potentially even exclude some of the taxes on your realized capital gains. So let's see why you should potentially be excited about this opportunity. What are Qualified Opportunity Zones? These are economically distressed areas where the U.S. government would like to encourage investment to spur economic growth.…

Living Outside the U.S.? You May Be Able to Exclude Foreign Earned Income On Your Tax Return

If you are a U.S. citizen or resident alien of the United States residing and working outside the U.S. you should be concerned about the taxes implications.  The country you are living in may want to tax that income and in the U.S. you are required to report all your worldwide income so you could face double taxation on that income.  The U.S. however has some provisions that are meant to protect you from the double taxation.  One of which is the Foreign Earned Income Exclusion.

The Foreign Earned Income Exclusion allows you, if you meet the requirements, to exclude up to a certain amount of foreign earned income.  First of all, realize this exclusion is just for foreign earned income which means income that you earn by working as an employee or in your business while in a foreign country.  This does not include unearned income like investment or passive income even if you are living in another country.

To qualify you must have foreign earned income, your tax home must be in a forei…