Blog Entries - 2014

Year-End Planning for Business Owners

Posted on: November 1, 2014 12:10 am

written by: Dan Backus

The year is quickly coming to a close as is the time to review your current tax standing for the year.  Together we can determine the strategy needed to limit your business and personal tax liability.  Keep in mind that any business or investment decision made just to save some tax dollars is never a good strategy. Three of the more common planning methods to quickly affect current year tax liability:

Tax Deferral

Tax deferral allows you to postpone on earnings and contributions made.  Thus, a faster growth on investments with a possible lower tax bracket in retirement.


  • Contribute to a retirement plan.  Contribution limits for those under 50 in 2014 are $5,500 IRA, $17,500 401(k), and up to $52,000 for Simplified employee pension (SEP) plans. 
  • Sell stocks at a loss to offset current year gains.  You can avoid changing your investment position by replacing them with a security of another company in the same industry or re-purchase after 31 days.
  • Group itemized deductions in the same year.  Consider paying medical, state/local income tax due, real estate taxes, and charitable contributions in order to maximize itemized deductions. In the following year, the $12,400 standard deduction can be used.

Accelerating Income

A strategy of accelerating income or delaying deductions can be beneficial for those with suspended losses.  In the event that your income is much lower this year than it will be next year the method will help to avoid the higher tax bracket in 2015.  Especially useful for an individual who plans to purchase health insurance on a health exchange and are eligible for a premium assistance credit.

  • Convert traditional IRA into a Roth IRA to diversify retirement income.  This will increase current year taxes while allowing the account to grow tax free.
  • Put cash or assets into your company to help realize suspended losses.
  • Delay the sale of an expected long-term capital losses as it will be more valuable if they are used to offset short-term capital gains or ordinary income. To do this requires making sure that the long-term capital losses are not taken in the same year as the long-term capital gains are taken.

Reducing Income

Likely the first thought when it comes to tax planning is how to avoid the tax altogether.  There is an assortment of options that need to be utilized prior to year end. 

  • Purchase equipment to put in place before year end for depreciation.  While the ability to fully expense purchases has been reduced, there is still a $25,000 limit that can be used in 2014.
  • Wages paid to children in a family business are deductible by the owner as business expenses.  The child may pay little or no tax on the earned income, because the child's standard deduction is available to offset earned income in its entirety.
    • Records need to be maintained to authenticate the reasonableness of wages and job performed.
    • Health Saving Accounts allow eligible individuals to make deductible contributions that can later be withdrawn tax -free to reimburse the individual for out-of-pocket medical expenses.  This can be an easy way to reduce income by $3,300 to $6,550 while saving money for expected medical cost on your or dependents.
    • Use credit card to pay December business expenses to record a deduction in 2014 while in 2015.
    • Pay health insurance through business instead of personally.

Tangible Property Regulations, TPR, are changing on capitalization and deductions coming in the year 2014.  For more information on TPR please see our 2014 November Newsletter using the link provided.

 Call us to schedule a time to meet so that you can take advantage of the tax deductions that are in place helping you hold onto more of the income you have earned.  Together we can determine the strategy needed to limit your business and personal tax liability.  We look forward to hearing from you. 

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Charitable Giving - Document, Document, Document

Posted on: October 1, 2014 12:10 am
written by: Ritva Williamson As the Holiday Season approaches we tend to become more generous and soft-hearted.  A widely-held perception is that corporations and foundations are the biggest sources to tap for grants and donations.  The reality is read more …

International Taxation

Posted on: September 2, 2014 9:30 am
written by: Deb Kramer Dividends and interest earned from a foreign corporation, wages earned outside of the U.S. and retirement earnings/gains carry with them another tax code animal, referred to as, International Taxation.  Discerning the rules that read more …

How to pay ZERO TAXES on some kinds of investments...LEGALLY!

Posted on: August 1, 2014 10:00 am
  Sound too good to be true?  Back in 2008, in an effort to reduce taxes for the middle class, Congress enacted something now called the Bush-Era Tax Cuts. These cuts cause the federal income tax rate on long-term capital gains and qualified read more …

Understanding Pre-Tax Payroll Deductions

Posted on: July 1, 2014 10:00 am
Tags: Pre-tax payroll deductions, Types of pre-tax deductions
written by: Michelle Meister Some of us clip coupons, others recycle or carpool to save a buck.  However, when it comes to our paycheck, most of us are willing to accept it’s taxation before considering ways to save.  One of the best and most read more …

How to Use your 529 College Savings Plan

Posted on: June 5, 2014 3:00 pm
How to Use a 529 College Savings Plan As with any investment there are benefits and drawbacks to contributing to a 529 college saving plan.  By now you likely have heard the benefits for contributing to a 529 college savings plan from advertisements or read more …

Common Divorce Tax Issues

Posted on: May 9, 2014 10:00 am
written by Ritva Williamson When is the divorce official (for tax purposes)? A taxpayer is considered unmarried for the whole year if they have obtained a final decree of divorce OR separate maintenance or have obtained a decree of annulment by the last read more …

An Extension!

Posted on: March 26, 2014 12:00 pm
My CPA Says “Extend” What Does That Mean To Me?   What does filing an “extension” do? An extension is a form fi led with the IRS to request additional time to file your tax return. The extension period is 6 months, which read more …

Fraud Risk Assessment

Posted on: February 12, 2014 3:00 pm
Tags: Controls to prevent fraud
written by: Bryan Boynton   An organization with a strong internal control environment periodically evaluates their control environment through a risk assessment. During a risk assessment the organization’s significant risks are reviewed by read more …

The Paperless Payroll Trend

Posted on: January 1, 2014 10:00 am
Tags: Paperless billing
written by: Michelle Meister If there is one word to describe how businesses are changing in 2014, that word would be “paperless.”  Thanks to the continual growth of the electronic world, more & more businesses are reducing their read more …