Tax Planning
Why Should I Do It?
Year end tax planning has been challenging from year to year. Individuals face higher rates on income, especially capital gains and dividends as well as other changes in prior year deductions, rates and exemptions. Previous strategies may no longer be effective. Additionally, there are substantial new strategies and planning that can save you and your business money. Some of those changes are as follows:
Retirement Plans & IRAs
Many pension plans must be set up before the end of the tax year even if the contributions are not due until some later date. The actual plan must be initiated and the documents finalized before the end of the year. As such, it is very important to plan these pension transactions immediately. Significant tax deductions can be achieved by enacting a retirement plan for your business.
S-Corporation & Partnership Basis
The IRS has stepped up audit procedures in verifying ownership basis in S-Corporations and Partnerships. Increasing your basis in these entities may prevent deduction limitations from these entities.
Alternative Minimum Tax
Watch out for the AMT, which applies to both individuals and many corporations. A decision to accelerate an expense or to defer an item of income to reduce taxable income for regular tax purposes may not always save taxes because it may subject the taxpayer to the alternative minimum tax.
