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Midyear Tax Planning Should Be A Business Priority

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It’s midyear 2013 — time to take a serious look at your business tax planning. Here are some places to start.

  • Review your equipment needs. You can expense $500,000 worth of new or used equipment purchased for your business this year, and you can take 50% bonus depreciation on new equipment purchases.

    You can use both breaks this year, and the two benefits can even be combined on the same purchase. For example, you can use the expensing option on a piece of equipment and apply bonus depreciation to the remaining cost if the property qualifies. Be aware that the expensing benefit phases out once your total equipment purchases for 2013 reach $2 million.

  • Put your children to work. When you’re self-employed, wages paid for work done by your under-age-18 child are not subject to social security and Medicare tax. But if your business is a corporation, you’ll have to withhold these payroll taxes on your child’s wages just like any other employee.

    Either way, you can claim your child as a dependent on your personal return, assuming you meet other rules. In addition, the first $6,100 of wages can be free of federal income tax to your child. Consider using the wages (or other money you contribute) to establish an IRA for your child. The maximum contribution for 2013 is $5,500 or 100% of your child’s earned income, whichever is less.

  • Take travel tax savings. Travel by plane, train, bus, or car to a convention, conference, or seminar for a valid business purpose, and your expenses can be fully deductible. Take along your family and add personal vacation days to your trip, and some of your costs may be nondeductible. Before you finalize your itinerary, get details on the rules and recordkeeping requirements so you can claim the maximum tax advantage from your summer travels.

The post Midyear Tax Planning Should Be A Business Priority appeared first on Thaney & Associates.


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