Have You Started 2016 Year-End Tax Planning?
The main goal of today's article is to have the IRS owed you money when you file your 2016 tax return. Here's a tip we would like to share with you... IRS Reg 1.263 contains a safe-harbor rule that allows cash-basis taxpayers to prepay and deduct qualifying expenses up to 12 months in advance without challenge, adjustment or change by IRS. For a cash-basis taxpayer, qualifying expenses include, among others, lease payments on business vehicles, rent payments on offices and machinery, and business and malpractice insurance premiums. Example, Anna pays $1,000 a month in rent. She would like a $6,000 deduction in 2016. So on December 31, 2016, she mails a rent check for $6,000 to cover her first six months of 2017 rent. Her landlord does not receive the payment in the mail until Jan 4, 2017. Here are the results: 1) Anna deducts $6,000 in 2016 and 2) The landlord reports the income in 2017. When it comes to your taxes, business deductions are king. The more deductions you can claim, the less you pay in regular taxes. If you feel that tax planning will help you reduce your taxes for 2016, why not pick up the phone and call us at 832 795 9612 today!