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- What does the potential elimination of the A.C.A. mean to you? - October 28, 2020
Although David Letterman has retired from late night TV, I thought I would do a series on the Top 10 Tax Strategies for Small Businesses. Review these and see if any apply to you. I will be posting these strategies over several posts in order not to make the posting too long.
- Don’t forget to elect section 179 for equipment purchases: For equipment placed in service in 2015, you can elect to write off up to $25,000 of equipment. This applies to both new and used equipment as long as it was new to you and also applies to any qualified SUVs and trucks that you bought this year and used in business. The deduction phases out dollar-for-dollar for purchases over $200,000.
- Avoid the last quarter tax trap: Any equipment purchases above the $25,000 max noted in item (1) above, have to be depreciated. However, if you buy over 40% of the equipment for the year in the last quarter of the year, the depreciation allowed could be greatly reduced. It is a tax trap for the unwary.
Better idea: postpone buying equipment, above the $25,000 expense election , till 2016. You will avoid this last quarter tax trap, and Congress might significantly increase the $25,000 election in 2016.
- Hire your kids in your business: Payments to assistants in business are deductible. Even better, if the kids are under age 18 and you are self employed or an independent contractor, you don’t pay any FICA , Medicare or unemployment taxes on their wages. Also, the first $6,300 is tax free from income tax.
Tip: make sure you can prove that they did legitimate work for you with time sheets and with a contract for services with them.
Part II will be posted tomorrow.
Material partially derived from my book, “Lower Your Taxes: Big Time” and my DVD series, ” Tax Strategies for Business Professionals”
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