Mid-Year Tax Planning
by, Tashia M.
Flucas
Mid-Year Tax Planning Basics
Most people don't
tend to think about their income taxes in the summer, preferring
to spend time in the sun and plan vacations. However, did you
know the IRS might just pay for some of that vacation?
According to IRS
regulations, as long as the the main reason for your trip is
business, you can write off the trip's expenses, even if you
include time for pleasure! Think about adding vacation time
onto the end of a trip to a conference, for example, or consider
bringing your family along and scheduling outings in between
meetings with clients. Just make sure that you keep records to
show how much you spent and how it related to your occupation.
A tax-free way to
make money while you're on that summer vacation may be easier
than you think! If you are able to rent your house during your
vacation for two weeks or less, you will not have to pay one
penny of tax on this income. For people living near hot
vacation spots or tourist attractions, this could translate into
thousands of dollars for two weeks when you won't be in your
house anyway!
5 Mid-Year Tax Planning Tips For Your Business
~Donate to Charity
Donations to charity reduce the amount of taxes that your
business will have to pay, and mid-year is a good time to
make those donations, as you generally have an idea of how
much you will owe in taxes and how much you can afford to
donate to reduce your tax liability. Plus it is a great way
to connect and help out your community.
~Make
Estimated Tax Payments
Small business owners have the added responsibility of
making quarterly estimated tax payments. While this may
feel like a burden at the time, remember that these payments
go toward the taxes that you would otherwise have to pay
(along with a penalty) at the end of the year. Second
quarter estimated tax payments are due June 16th.
~Major
Purchases of Business Equipment of Furniture
Halfway through the year, your business should be about
halfway through the projected income and expenditures. You
should be able to get an idea of how much disposable income
you have in the budget and what it needs to be used for.
Don't forget that purchases of office equipment and
furniture for your business are tax-deductible.
~Review Your Business Plan
Business plans need to be periodically reviewed to make sure
that your goals and objectives are on track and continue to
be accurate. Summer is the perfect time to review a
business plan, as you are halfway through the year and can
review your progress to-date.
~Review Your Financial Statements
June is an ideal time to review the financial statements for
your business, in order to see how your business is faring
with regard to its financial health. The Profit & Loss
statement shows your business's revenue, expenses, and net
income. A quick look at a mid-year Profit & Loss statement
can show you if your business has made or lost money
to-date, enabling you to re-evaluate your business's goals
and processes as needed.
3 Mid-Year Tax Planning Tips For Your Personal Finances
Mid-year tax
planning is a good idea for any individual. By this time in
the year, you have a better idea of what your income,
expenses, and deductions will be than earlier in the year.
~Adjust
Your Wage Withholding
Making it an
ideal time to adjust your wage withholdings. You may wish
to withhold more money each month to ensure that you will
not end up owing the IRS any money next year. Or you may
wish to withhold less, instead choosing to invest it in your
retirement fund or savings account.
~Donate
to Charity
Donations to
charity are another good subject to revisit mid-year, as
they are tax-deductible and can reduce the amount of taxes
that you will owe at the end of the year. Many people
scramble around in December trying to make large donations
to reduce their tax liability, but if you can spread the
donations out over the year, it will be easier on your
budget and you will probably be able to donate more,
reducing your taxes further.
~Contribute
to Your Retirement Plan
In addition,
spend some time mid-year thinking about your contributions
to your retirement plan, as this will also work out better
if regular contributions are made, rather than one frantic
contribution at the end of the year.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Tashia M.
Flucas is in the business of saving both time and money for her
clients. As the owner of tmf Accounting Services she provides
expert, professional financial services, and writes the Money
Matters with tmf Accounting Services newsletter on a monthly
basis. To find out more about saving time & money to focus on
building your business, give Tashia a call at 510.706.7711 or go
to
www.tmfAccountingServices.com for more info.
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