1545 6th Street Ste 201
Green Bay, WI 54304
920-884-2233
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Year End Tax Planning
At year-end there is always an opportunity for you to benefit from some last minute planning. Plus, the beginning of a new year gives you a
good chance to do some advance planning.
If you expect your income to be significantly different next year, you might accelerate or delay either income or deductions.
For Business Owners
Planning to Increase Income in the Current Year
- If planning asset sales in the near future, sell the most appreciated assets before year-end
- If you have sold assets on the installment basis, consider accelerating your gain by using the note as collateral for a loan
- try to collect as many accounts receivable as possible before year-end
- get customers to prepay for goods or services to be provided early next year
Planning to Delay Income Until Later
- delay year-end billings so payments do not come until the following year
- postpone finalizing any debt cancellation that will result in cancellation-of-debt income until next year
Planning to Increase Deductions in the Current Year
- Pay deductible taxes in the current year
- establish a retirement plan before the end of the year
- write off the first $250,000 spent to acquire business assets (the “Section
179” deduction). The deduction limit is reduced when total expenditures exceed $800,000
For Individuals
Planning to Decrease Income in the Current Year
- sell investment assets with losses, up to $3,000 of net capital loss can offset other taxable income
- donate a vehicle to charity, give it to a charity that will use it, not sell it.
That will allow you to take a fair market value deduction
- Pay the state and local taxes that are anticipated to be due in the current year.
- Make the maximum 401(k) contributions
Planning to Increase Income in the Current Year
- If you are over 59½ and covered by an employer’s retirement plan or an IRA, you could take additional distributions in the current year
- If it makes good business sense, you could exercise incentive stock options before the end of the year
- Arrange for your employer to pay any current year bonus early next year
Planning to Delay Deductions Until Later
Don’t pay deductible business expenses until next year.
Don’t pay deductible taxes, interest and contributions until next year.
Don’t sell investments that will generate capital losses.
Vehicle Donations
In 2005 the rules for vehicle donations changed. Before, you could just deduct the fair market value of a vehicle donated to a charity.
Now, if the charity sells the vehicle, your deduction is limited to the proceeds received by the charity. If the charity does not sell the
vehicle, but uses it in furthering the organization’s charitable purpose, you can deduct the vehicle’s “fair market value” if the
charity provides information to you that must be filed with your 1040 to support any claimed deduction.
We can help you adjust your tax withholding or estimated tax payments based on different assumptions to avoid penalties.
As always, just let us know when we can be of assistance.
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