Tax Reduction Strategies

With every business decision that you make, you probably try to calculate how much money you’ll need to spend versus how much money you could save. If you’re considering finally hiring a CPA, you should know that a CPA helps to save you money in many different ways.

As a business owner, you know first-hand that taxes can take a big chunk out of your pocket. No matter how small your business is or how large you grow, you’ll always be on the hook for some kind of taxes. However, the tax code is such that there is always room for strategic tax savings as long as you operate within the laws.

Small strategies make big impacts when it comes to figuring out the year’s deductions. Sadly, many small business owners never get the help they need because they’re simply unaware of the many tax deductions available to them. This is where a good, knowledgeable CPA is invaluable.

The Tax Cuts and Jobs Act (TCJA) has enhanced two depreciation-related breaks that are popular year-end tax planning tools for businesses. To take advantage of these breaks, you must purchase qualifying assets and place them in service by the end of the tax year.

A key portion of the new Tax Cuts and Jobs Act (TCJA) is Section 199A and its deduction of qualified business income. Section 199A allows taxpayers other than corporations a deduction of 20 percent of qualified business income that is earned in a qualified trade or business, though this has some limitations.

Are you a high-income small-business owner who doesn’t currently have a tax-advantaged retirement plan set up for yourself? A Simplified Employee Pension (SEP) may be just what you need, and now may be a great time to establish one. A SEP has high contribution limits and is simple to set up.

With bonus depreciation, a business can recover the costs of depreciable property more quickly by claiming additional first-year depreciation for qualified assets. The Tax Cuts and Jobs Act (TCJA), signed into law in December, enhances bonus depreciation.

With so many possible deductions and credits available to the individual taxpayer it’s no surprise that the possibilities can get easily lost in the shuffle.

Income tax reform and President Trump are not exactly my two favorite topics. However, understanding the impact on various income tax deductions and tax credits brought about by President Trump’s attempt to “make things better” vis-à-vis tax reform should not be ignored.