Last Minute Tax Planning Tips for Businesses

At Potts & Company we are always trying to help you solve your goals. Here are a few ideas which may help you plan for your December 31 tax year-end. These ideas are made, except as indicated, as if provisions scheduled to change as the law now exists are allowed to expire. As you know, there is no way to predict what changes Congress may make. Also, some of these ideas have different results on your state income tax. We’ll be very happy to discuss any of these thoughts with you. Just call.

Deferring Income to 2013?

Deferring income to the next taxable year is a time-honored year-end plan. Generally, if you think you’ll be in a higher tax bracket next year, and you can delay income until 2013, you may benefit. Ways to do that may be:

  • Use of Cash Method of Accounting: By using the cash method of accounting instead of the accrual method of accounting, you can generally put yourself in the best position for accelerating deductions and deferring income. Some businesses who are presently on the accrual method can change to the cash method. You’ll need help to see if you qualify but if you’re interested, let us know.
  • Delay Billing: If you delay year-end billing to clients so that payments are not received until 2013. Date of receipt counts for a cash basis taxpayer.
  • Accelerate deductions: Pay invoices for expenses now even though they aren’t due until 2013. Date of payment determines time of deductibility for businesses on the cash basis.

Last Minute Tax Planning Tips for Individuals

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With only two weeks until the end of 2012, many of us have begun the annual ritual of analyzing our current year income tax situation to determine if there are any last-minute decisions that should be made to reduce our income tax. However, we find our President and our Congress spending their time and energy negotiating a tax policy, yet unable to reach a compromise, leaving us with great uncertainty of what income tax changes might become law and how this will affect us.