Last Week Of The Year: Tax Planning
BOSTON (CBS) – There are 6 more days left in this year. There is still time to do a little tax planning.
Taxes will always be here. Taxes are the price we pay for a civilized society. And we are a civilized society! Despite the way people behaved on Black Friday!
If you pay estimated taxes they are due on January 15th of 2012. But you can prepay your Massachusetts estimated taxes this week and get the deduction for 2011. But if you got caught in the AMT last year check with your accountant before paying them early.
It’s not too late to make a donation to your favorite charity. You can write them out a check and send it off or give them your credit card number and either way you’ll get the deduction for this year. Use a credit card with frequent flyer miles or a rebate program. That way you’ll be rewarded for doing a good thing.
If you have the week off, think about cleaning out closets or the attic. I hear you, I know it’s a vacation week, but it’s cold out and you are tired of the stores and the kids need something constructive to do away from their games. Get some good packing boxes from the grocery store and start getting rid of the stuff that is cluttering up your house.
We have a policy at our house if we get something new, something old has to go to make room for it. So the Goodwill always gets lots of good stuff the week after Christmas from us.
Make a trip to a drop-off center at the Goodwill or the Salvation Army. Get it there before Friday and the deduction will be for this year. Remember to get a receipt and be reasonable with the estimated value of the items you are dropping off.
New IRS regs state that you can no longer claim deductions for used clothing and household goods that are not in “good” condition or better. It should be clean, no holes, not smelly and not needing repair. And it should be something the charities can sell in their stores. If you wouldn’t give it to a friend, don’t give it to the charities! Just pitch it.
Use the Salvation Army’s website to get a list of suggested deduction amounts.
Small businesses; take the time to review your Profit and Loss statement. If it’s been a profitable year you can still do some planning. Consider doing some retirement planning. Set up a Simplified Employee Pension Plan, a SEP-IRA. If you use a SEP you will need to include your employees in the plan as well.
If you make a major purchase for your business you usually have to depreciate it, expense it over the life of the property. The IRS allows Section 179 Expenses for small business owners to be deducted this year, up to $500,000 of expenses.
So if there is an after Christmas sale on that computer you wanted or the new copier you can buy it today and expense it this year.