accounting, audit, business advisory and tax services
if you limit how many vacation days employees can roll over to the new year, you might find your workplace to be nearly a ghost town as employees scramble to use their time off rather than lose it.
The first step to smart timing is to project your business’s income and expenses for 2015 and 2016. With this information in hand, you can determine the best year-end strategy for timing business income and expenses.
If you expect to be in the same or lower tax bracket in 2016, consider:
Deferring income to 2016. If your business uses the cash method of accounting, you can defer billing for your products or services. Or, if you use the accrual method, you can delay shipping products or delivering services.
Accelerating deductible expenses into 2015. If you’re a cash-basis taxpayer, you may make a state estimated tax payment before December 31, so you can deduct it this year rather than next. Both cash- and accrual-basis taxpayers can charge expenses on a credit card and deduct them in the year charged, regardless of when the credit card bill is paid.
If you expect to be in a higher tax bracket in 2016, accelerating income and deferring deductible expenses may save you more tax over the two-year period (though it will increase your 2015 tax liability).
For help projecting your income and expenses or for more ideas on how you can effectively time them, please contact us.
Copyright 2015 Thomson Reuters
Image courtesy of Stuart Miles at freedigitalphotos.net
Earlier this week, U.S. House Ways and Means Committee Chairman, Congressman Kevin Brady, proposed legislation to renew numerous tax provisions for 2015 and 2016. The proposed bill includes maintaining tax provisions for Section 179 Deduction expensing and accelerated depreciation (bonus depreciation). The full list of tax provisions included in the bill can be seen here.
Congressman Brady is reported as saying that this bill is intended as a backup to extend tax provisions in the event that a larger deal cannot be brokered in congress.
The legislation is currently being considered by congress; Whalen & Company, CPAs will notify our clients as this bill progresses.
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Many of the strategies that can help you save or defer income tax on your investments can also help you avoid or defer NIIT liability.
For most of the last decade, year-end tax planning has been complicated by a great deal of uncertainty. This year is no different.
As things now stand, dozens of favorable tax-law provisions that technically expired after 2014 are in limbo. Some or all of those provisions may be reinstated, even retroactive to the beginning of the year, if Congress enacts new legislation. But there are no guarantees that the nation’s lawmakers will come to an agreement before 2016. Furthermore, even if changes are enacted, they may occur too late for taxpayers to take any meaningful tax action. Stay tuned to our blog for developments on these tax extenders.
We know that taxpayers must contend with a continuing stream of new cases, rulings and regulations on various issues that could affect year-end tax-planning decisions.
With this in mind, Whalen & Company has prepared 2015 Year-End Tax Planning tips for your convenience! Click here to download our 2015 Year-End Tax Planning Letter, which include guidelines for:
Be aware that the tax-planning concepts outlined in the attached are only intended to provide an overview. It is recommended that you review your situation with your Whalen & Company, CPAs tax professional.
