Henderson & Godbee, LLP: Planning Year-End Tax Moves in an Uncertain World
Tuesday, December 17th, 2013
Tax planning has never been tougher. In order to make moves at the end of the year to minimize your tax exposure, you need some idea of what the tax rules will be in the year ahead. But with an improving yet fragile economy, growing budget concerns and political gridlock in Washington, it's difficult to know what to expect in terms of tax-rule changes.
"Many of the stimulus deductions, such as accelerated depreciation, were designed to encourage businesses to spend. As the economy improves, people question whether those deductions are still needed and it's difficult to know what to anticipate," said Amber Tanner, CPA, partner in Henderson & Godbee, LLP.
Henderson & Godbee, LLP, is a full-service accounting firm that has served the Valdosta community and surrounding area for more than 26 years. With a staff of about 35 employees, including 17 CPAs or CPA-track professionals, the firm provides audit, tax and tax planning, business consulting, employee benefits, data processing and other services.
"There are a few year-end tax planning tips that businesses should keep in mind for 2013, but it's also true that everybody's situation is different – different business cycles, different outlooks. What works for one may not for another so it's important to consult a tax professional about what's going on in your business," Tanner said.
Consider These Tax Tips Today
Here are five year-end tax planning tips that could help minimize tax outlays for some businesses.
Take advantage of accelerated depreciation options for 2013.
Current tax rules allow for expensing the cost of qualified new or used business property rather than depreciating over its useful life. Known as 179 deductions for the code number of the relevant tax rule, these deductions are capped at $500,000 for 2013. According to Tanner, the cap could decrease significantly in 2014 and business owners should consider taking advantage of the higher limit for 2013.
Take Advantage of Bonus Depreciation
Bonus depreciation, which allows for the expensing of 50 percent of the cost of qualified new business equipment only, may or may not be available in 2014. Business owners could consider accelerating the purchase of qualified new equipment into 2013 in order to take advantage of the availability of bonus depreciation.
Maximize contributions into qualified retirement plans.
Contributing to qualified retirement plans is a way of deferring income into the future when your tax rate may be lower while also saving for retirement. According to Tanner, there are many different types of retirement plans. Certain ones can be established up to the last day of the year.
If complicated home-office rules kept you from taking a deduction in the past, think again.
Rules for calculating the home-office deduction had been fairly complicated. Qualified expenses were prorated based on the square footage of the office and home. For 2013, the IRS simplified the method. The deduction is now calculated by multiplying $5 times the square footage of the home office, with a limit of $1,500. According to Tanner, the rules are still intact on what qualifies as a home office.
Use Old-Fashioned Timing Techniques.
Cash-based businesses can consider paying bills before the end of the year to accelerate the expenses they can use in calculating their 2013 tax bill.
An Established Community Partner
Henderson & Godbee serve clients in a variety of industries including professional clients, retail and manufacturing, construction, real estate, and government entities and affordable housing.
"We've been established in the community for a long time, and community involvement – both on an individual and group basis – is a big part of our firm," Tanner said.
In August 2013, the firm held its inaugural Community Service Day with a group of employees working on a Habitat for Humanity new home build. This year employees also participated in the United Way Day of Caring Amazing Race and The Haven Battered Women's Shelter 3rd Annual Justice in Motion 5K race.