Year-End Planning Ideas (SUBJECT TO CHANGES IN FEDERAL TAX LAW)

Personal:

  • You may be able to deduct $5,500 ($6,500 for those over 50) for an IRA contribution for 2013- that is up $500 from 2012.
  • You may benefit from converting your IRA to a Roth IRA in 2012, or by taking taxable income in case your tax rate rises next year.
  • ‘Bunch’ itemized deductions into one year if they don’t exceed the itemized deduction.
  • Travel for medical and charitable purposes may be deductible.
  • Professional tax & investment planning can be a deductible expense.
  • Look into qualified energy saving ideas for your home and auto for tax credits.

Business:

  • Items bought for personal use, but used in the business are at least partially deductible when converted.
  • To save health insurance dollars, look into a Health Savings Account or other plan. You may now get a tax credit for employee insurance.
  • Travel between two business locations is generally deductible- the 2013 business mileage rate is 56.5 cents, 24 cents for medical & moving and 14 cents for charitable work and donation deliveries.
  • A Simplified Employee Pension (SEP) plan is easy to set up and great for business owners.  20% up to $50,000 (2012) and $51,000 (2013), of net income can be contributed each year.
  • There are no Federal employment taxes due when employing your children under 18 in your non-incorporated business. Unemployment-21.
  • Shop by December 31st to deduct for 2012.
  • Now is a good time for many people to start a small business of their own!