MyGeorgiaAccountant.com

Happy Holidays!

As we are now into the last weekend of 2014, I thought it best to point out a few tax-saving strategies that can still be implemented before the 2014 tax year ends. I know that with all of the excitement of the holidays and family being in town, taxes are the probably the last thing on your mind, but it only takes one of the strategies listed below to possibly help to lower your 2014 tax bill.

As always, please contact someone at our firm should you have any questions about the information below and how it applies to your individual tax situation.

Year-End Tax Planning for Individual Taxpayers

• Prepay your mortgage payment that is due on January 1, 2015 by December 31, 2014. You can deduct the interest on your 2014 tax return.
• Charge deductible expenses like medical bills, state and local taxes, real estate taxes and charitable donations to your credit card. By charging these expenses now, they become deductible in 2014 even if you do not pay the credit card bill until next year.
• Pay your state estimated tax payment that is due on January 15, 2015 no later than December 31, 2014. This will count towards your itemized deductions on your 2014 tax return.
• Sell stock losses before the year ends. This will help to offset any capital gains and possibly enable you to take a loss of up to $3,000 on your 2014 tax return.
• Maximize your charitable contributions and donate unwanted items before the year is over. Please try to document the items that were donated and take pictures as well if possible. Also, hold on to the receipts that you receive when donating.
• Exhaust all of the funds contributed to your Flexible Spending Account (FSA) by year-end. You may be able to charge expenses for 2014 through March 15, 2015, but please verify this with your employer as this is at their discretion. Any remaining funds after the spending deadline are forfeited.

Year-End Tax Planning for Business Owners

• Cash-basis taxpayers, pay any outstanding bills by December 31, 2014 (this includes mailing the check on December 31, 2014). This will allow you to deduct the expense in the current tax year even though the payments may not hit your account until January 2nd or 3rd or later.
• Also for cash-basis taxpayers, remember that all payments that are received on or before December 31, 2014 are included in the current year’s income.
• For accrual-basis taxpayers, write off any non-collectible accounts receivable before the year ends.
• Also for accrual-basis taxpayers, remember that your revenues are calculated based on what you invoice and bill between January 1, 2014 and December 31, 2014. Any work performed after December 31, 2014 will be included in income for the 2015 tax year.
• Write off any obsolete inventory as of year-end.
• If you are planning on upgrading your computer or any other business equipment (machinery, vehicles, etc.), try to do so before year-end. This will also allow you to take advantage of any holiday promotions that are in effect and in most cases you can write off the entire purchase amount (against profits) for the 2014 tax year. If you are facing a profitable year and therefore, higher taxes, this could offer an instant last-minute deduction for your business.

On December 19, 2014, the Tax Increase Prevention Act of 2014 was signed into law by President Obama.  This bill was implemented to address over 50 different tax breaks that had expired at the end of the 2013 tax year.  Each of these were initially passed as temporary tax breaks and were then extended repeatedly over the last several years. All of the tax breaks listed below are currently set to expire on December 31, 2014, but will be available for the 2014 tax year.  Some of the more important tax laws that were extended include:

For individual taxpayers:

• The income tax exemption for up to $2 million of debt forgiven on home foreclosures and repossessions, which turns any income realized on a foreclosure or repossession into a non-taxable event
• A deduction for tuition and fees of up to $4,000 is currently available to parents and students paying for college
• The Educator’s Expenses deduction, which allows teachers to deduct up to $250 of personal funds spent on classroom supplies
• The itemized deduction for mortgage insurance premiums paid on a primary residence
• The Energy Efficiency tax credit of up to $500 for energy efficient home improvements – including new windows and doors
• Retirees older than 70-and-a-half have traditionally been able to make non-taxable charitable donations of up to $100,000 directly from their IRA disbursements. This tax break has also been extended for the 2014 tax year.

For businesses:

• The maximum annual Section 179 depreciation deduction on newly acquired fixed assets was originally set to decrease from $500,000 to $25,000, but the $500,000 annual limit has been renewed for the 2014 tax year. This is even more reason to purchase any expensive equipment before the year ends because you will lose the ability to write off the entire purchase in one year, and will need to write off equipment purchases over a multiple year period using regular depreciation – which is typically 5 years or more.
• 50% Bonus and Special Depreciation on new fixed asset purchases
• The 15 year amortization (write-off) period for qualified leasehold improvements, qualified retail improvements, and qualified restaurant buildings and improvements (this was originally set to revert to the original 39 year amortization period)
• The Research and Experimentation tax credit
• The Energy Efficient Commercial Buildings Deduction

Please remember, the information above contains general tax-savings information and it may or may not apply to your particular situation. It is strongly advised that you contact Shurek Accounting & Tax or your own tax adviser before making any of the moves listed above if you are not sure as to their deductibility.

Shurek Accounting & Tax would like to thank you for your business this past year and we hope that you and your family have a safe and enjoyable holiday season.