Johnson Nathaniel

12/08/2020

Here are four general business tax deduction strategies that you can implement before the end of 2020:

1. Prepay your 2021 expenses now to reduce your taxes this year. While it's true you kick the can down the road some, perhaps you have an offset with a big deduction planned for next year. However, even if you don't have such a plan at the moment, you have plenty of time to create one or to put additional big deductions in place for 2021.

2. Stop billing customers. Once again, this kicks the can down the road some and makes your 2021 tax planning more important.

3. Buy office equipment. With 100% bonus depreciation and increased Section 179 expensing in 2020, you can make significant purchases of equipment, machinery, and furniture and write off 100% of the value. Make sure you place the assets in service on or before 12/31, to get the deduction this year.

4. Use your credit cards. Charges to your credit card can create deductions on the day of the charge. This is absolutely true if you are a sole proprietor or if you operate as a corporation and the credit card is in the name of the corporation. But if you operate as a corporation and the credit card is in your personal name, your corporation needs to reimburse you before 12/31 to create the 2020 deduction at the corporate level.

We know that taxes can cause confusion. Please feel free to DM us for more insight into these (or other) year-end strategies. ..........

12/04/2020

Consider these 5 tax planning strategies before the year ends:

1. Claim your sick days: If you're self-employed, the government is paying you up to $5,110 to take 10 sick days in 2020. Also, if you have a child and their school has been closed for in person learning, you can claim an extra $10,000 of family paid leave. Depending on your entity or how you are structured, you may need to take action before the year ends. Otherwise, you'll miss out on this benefit.

2. IRS Minimal Rental Use Rule: Rent out your home to your business for 14 days or less, and get a big tax write off. If you are a business owner, you can rent out your home to your own business for 14 days or less. This is called the “Minimal Rental Use Rule”, and it is completely separate from the home office deduction. By utilizing the minimal rental use rule, you'll get a deduction for your business, and it will be tax free income to you personally.

3. Avoid penalties on your unemployment compensation: If you've received unemployment benefits this year, consider using a tax tool estimator to see if they took out enough taxes from your unemployment compensation. If not, you're going to end up with a surprise tax bill, and could be charged penalties and interest. So, please make sure that enough taxes were taken out of your unemployment compensation.

4. Stock Loss Harvesting: If you lost money trading stock or crypto, you can sell the stock or that crypto for a loss, and claim that deduction to reduce your taxes. This is called stock loss harvesting.

5. If you're expecting to incur expenses in January or February, you might as well pay those bills now (i.e. any time before 2020 ends) so that you can use it as a write off in 2020, instead of waiting 12 months for you to reap those benefits. This could be things like rent, utilities, buying a laptop or other office supplies. As long as the payment is initiated by December 31 or product is mailed out by December 31, it will count as a deduction for 2020.
DM us for more information on these and other tax saving strategies.
…..
….
….