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Posted on: June 24th, 2013
When do you start hunting for tax reductions? If you are like most taxpayers, the answer may be around the IRS tax filing deadline. Often, that's too late to make a difference.
Business owners have many opportunities to generate tax reductions throughout the year. Whether you are self-employed or run your own corporation, you can plan ahead to slim down your IRS obligation by using the deductions described in this article.
Planning Idea: Keep a notebook in your car. For every business trip, log the starting and ending odometer readings, the business purpose and date.
Planning Idea: If a gift is intended to be used by a number of people, not an individual, you may be able to deduct more than the $25 limit. For example, suppose you regularly send a $100 holiday fruit basket to the president of a client firm. Only $25 is deductible. However, if you send the same basket to "all employees" of this firm, the full amount could be deductible (@ $25 per person). Consult a tax advisor for specific guidance.
Planning Idea: If you regularly "order in" food for employees and pay for it, document on the receipt how many employees participated, the date and time, and the business purpose.
Planning Idea: Since you and your business are legally the same person, if you lend money and use it for personal expenses, the interest is not deductible, but if you use the money for business expenses, it is.
For more ideas on deductible business expenses, visit the IRS' Web site at www.irs.gov and download a copy of Publication 535, Business Expenses. Also, talk to a qualified CPA or tax advisor well before the end of your business tax year, so you will have time to plan ahead for reducing your next tax bill.
Premier Planning Partners does not provide legal or tax advice. Please consult with your attorney, accountant, and/or tax advisor for advice concerning your particular circumstances.