As 2016 comes to a close, it’s a good time to reflect on the year and see what you did well and what could use improvement. An often overlooked aspect this time of year are tax deductions. If you make too much and spend too little you could end up paying more in taxes!
Below are a few tips that may help you reduce your tax burden.
1. Contribute to your retirement accounts
If you have an employer-sponsored retirement plan, then try to contribute the maximum before the year’s end. This also applies to your 401k and IRAs, as this can lower your tax burden. Depending on your situation, it may be possible to be eligible for a tax credit by opening an individual retirement account (not tied to your employer-sponsored account). Consult a professional to see if you qualify for this credit.
2. Pay for 2017 business needs now
As a business owner, you are able to write off certain expenses to help offset your tax burden. Tax deductible items range anywhere from gas and mileage, a phone bill, computers, etc. Consider making the following purchases before the end of the year:
- Member dues
Unless you are considering getting out of the real estate business in 2017, your member dues are pretty much a given cost. So why not pre-pay for the year and get that cost out of the way?
Have a few software/marketing tools/etc. that you can’t live without? Consider switching to an annual plan to save some money. If you’ve been scoping out new software and know what you want for the next year, then don’t wait to buy it, purchase it now.
Traveling for any trade shows in Q1? Purchase your flights and hotels now rather than later. Plus, booking your flights 2-3 months in advance assures that you get the lowest rates.
If you’re looking to upgrade any business related items such as a laptop, smart-phone, or new furnishings then take advantage of that now. You may get lucky and find what you need on a holiday sale.
3. Start Identifying tax-deductible items now
Start doing research on what are legal deductions you can make for the next year. While this tip won’t exactly help with 2016 taxes you’ll be better off next year if you start thinking about these things now. Keep receipts for everything that pertains to your business. Some commonly missed deductions are: online advertising, car expenses (gas and mileage), office supplies, and utilities (if you work from home). Perhaps make your new year’s business resolution to stay better organized with your expenses so around this time next year you’ll have a better idea of where you stand what you need to do.
Please note, we are not certified tax professionals. We did research to find helpful tips, consult a tax professional to see which of these tips will apply to your situation.