Business Tax Tips

  •  Deduct the cost of new business equipment.  In 2007 a business can elect to write off up to $125,000 of the cost of qualifying assets placed in service before the year end.  If total acquisitions exceed $500,000 the elected write off is reduced.
  • Set up a qualified pension plan if you are self-employed
  • Consider adopting a Health Savings Account health insurance plan.  See the article on Health Savings Accounts on this site.
  • Defer income if you are on the cash basis to next year by billing late enough in the year that the payments are not received until the following year.
  • Consider a home office if you are self-employed.  Look for ways to convert dollares that you are spending anyway into allowable, deductible business expenses.
  • Remember to document your automobile, travel and entertainment expenses

Individual Tax Tips

  •  If you are not in the Alternative Minimum Tax (AMT) pay your second isntallment of property taxes before December 31
  • Pay the final installment of your California estimated income taxes before December 31 if you are not in the AMT.
  • Make your January 1 mortgage payments before year end to claim the interest deduction in the current year.  Be sure to send the payment early enough to allow the lender to credit your account by year end.
  • Plan your capital gains and losses.  If you have capital gains for the year consider taking any tax losses you may have to offset the gains.  net losses up to $3,000 per year can be used to offset other income
  • Maximize your contributions to your 401(k) plan
  • Make your IRA and ROTH IRA contributions as early in the year as possible to maximize tax free compounding
  • If you are younger or less concerned with a current tax deduction, consider a ROTH IRA.  These contributions are not currently deductible but provide tax-free income forever
  • Obtain appropriate documentation, including letters from charitable organizations for contributions in amounts in excess of $250
  • Reminder -  all contributions must be documented by letters, receipts or cancelled checks