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Plan before year-end for tax savings

8/28/2015

With the hectic pace of the last 45 to 60 days of the year, don’t wait until then to start thinking about steps to take before Dec. 31 to lessen your 2015 tax burden.

She noted, for example, that some provisions that have expired or are set to expire are often extended by Congress toward the end of the year.“We do find a lot of clients scramble at the end of the year to minimize their tax liability,” said Erin Beatty, CPA, CHBC, with CPAmerica member firm Cowan, Gunteski & Co. “Clients always should touch base with their accountants because there are changes to tax provisions that could affect them.”

One provision that could change is Section 179, which allows businesses to deduct in a single year the cost of qualifying equipment purchased up to a certain dollar amount. The $500,000 maximum allowed in 2014 expired last Dec. 31. This year the maximum deduction is $25,000 unless Congress acts to extend the higher amount.

Rep. Paul Ryan, R-Wis., chairman of the House Ways and Means Committee, has indicated plans to push for an extension of expiring provisions early this fall and make some of them permanent. Therefore, practices contemplating a large purchase should seek advice from an accountant before making any decisions.

“We do not recommend buying just for the sake of getting a tax break,” Beatty said.

Other tax-saving steps to consider include:

Many physicians are subject to the alternative minimum tax (AMT). Your tax adviser can help to determine whether you will be hit by the AMT, which disallows many deductions.

“While it is hard to avoid it,” Beatty notes, “there are recommendations we make for those individuals.”

Some strategies include not prepaying certain expenses like real estate taxes or the estimated fourth quarter state income tax that is not due until Jan. 15.

Your tax adviser can discuss these and other steps and strategies to take now so that you may pay less come April 2016.

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