10 Tax Tips: How to maximize tax benefits in your practice
It’s that time of year. To help we share some recently released tips for getting the most out of tax benefits for 2016. We also look ahead to how to maximize those benefits in 2017.
Tip: The benefit of hiring an “enrolled agent” as your tax advisor is that he or she will have already passed the set of exams required to represent you in an audit.
- ASSET DEPRECIATION. Don’t forget about asset depreciation on diagnostic equipment, for example. Two caveats: The item must be income-producing and you need to have been using it for over a year.
- PROPERTY DEDUCTION. What about new purchases? Small business can deduct the full amount of certain property as expenses in the year the business began using them. Known as section 179 property, it includes up to $500K of eligible business property (defined as property used more than half the time).
- HEALTH CREDIT. Businesses with fewer than 10 FT (or the equivalent) employees earning on average less than $25K get the biggest credit. Turbotax says to use form 8941 to calculate eligibility.
- HIRING. The PATH Act, passed in Dec. 2015, offers benefits for hiring veterans as well as other groups of individuals (including those who have been receiving food stamps).
- EXTENSIONS. You can file a 6-mo. extension without incurring severe penalties. You do, however, need to submit your estimated payment due, along with your request, by the due date.
- DATES. Filing deadlines have changed. According Taxfyle, “The due dates for C-corps were pushed back from March 15 to April 15, while due dates for partnerships and S-corps were moved from April 15 to March 15.”
- TAX ADVICE. What should you look for in a tax advisor? Interview them as you would a new hire. Ask how many years of experience they have, how much time they say they expect to devote to you and your business, whether he or she is qualified to represent you in an audit, and how that individual plans to keep you updated on the ever-changing tax rules.
- ENROLLED ADVISORS. Your advisor can be an attorney, an accountant, or what’s called an enrolled agent. Not all accountants specialize in taxes, however. The benefit of hiring an “enrolled agent” is that they already passed the set of exams that are required before they can represent you in an audit. That’s one place good advice is definitely critical.
- RETIREMENT FUND. If you’re the boss, check out the advantages of starting a retirement fund for employees. According to AOAExcel partner Peter Polovsky, “The big advantage is that the employer gets a tax deduction for his or her contributions, and a tax deduction for contributing on behalf of employees.”
- WHAT’S AHEAD? As reported by Entrepreneur magazine, “For starters, the Trump Plan would reduce the corporate tax rate from a maximum of 35% to a rate of 15%. And most tax credits, other than the research credit, would be eliminated. This could have major tax consequences for small business.”
Who helps with your taxes? Is it part of your overall financial planning program? Share in the Facebook conversation about tax planning here.