Midyear tax planning is critical this year
With big tax changes scheduled to take effect in this year, every business should make time for a midyear tax review. Here are five tax-cutting ideas to consider as part of your review.
1. Hire your kids. If your child is under age 18 and works for your unincorporated business, there are no social security or Medicare taxes on the child’s pay. Wages paid to the child are also deductible. Just make sure the compensation is reasonable for the work actually performed.
2. Track your business driving. For 2018, the rate for business-related mileage is 54.5 cents per mile, and you can deduct actual costs for parking fees and tolls in addition to mileage. Keep detailed records to substantiate your deduction.
3. Deduct equipment purchases. to take advantage of the increased section 179 deduction for business equipment purchased this year.
4. Check your benefits. If you offer health benefits to your employees, look into tax-advantaged plans such as health savings accounts, flexible spending accounts, or health reimbursement arrangements. These plans can reduce your taxes and help control your benefit costs. Also, check the new tax credit for health insurance you provide to employees. You must meet certain requirements to qualify.
5. Establish a retirement plan if you don’t already have one. Examining the choices now gives you time to select the best plan for your business and to get the paperwork completed. Then you’ll be set to make contributions as your cash flow allows — and to take the deduction on your tax return. Another plus: You may be able to claim a credit on this year’s tax return for the costs of establishing the plan.
To discuss the tax-saving ideas best suited for your business, give us a call.
Tags: midyear tax planning
Written by: Doug Rodrigues