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Tax Moves To Make Before The Year End For Individuals And Businesses
The month of December is filled with festivities and lot of pending work to do. Some smart tax moves by individuals and businesses is advised during this time-period for enhancing the joy of the festive fervor. Enjoying the benefits of higher savingsis also included under this context.
The following details can be helpful in this regard:
- Charity donations
When funds are extended towards charitable causes, then the donated amount is reduced from the total earnings and tax is calculated on the derived figure.The amount of paid taxes can be reduced as a consequence. The government encourages people to give funds to the less-fortunate by doing so. It is also important to maintain records of the donation receipts for submission with other requisite documentsforfiling taxes.
- Mortgage payments
Pre-payment of mortgage installments is another way in which the taxable figures may be decreased due to the deductions of the related costs. Payments due in January can be completed in December to avail higher tax deductible interest. However, if tax advisors compute, then it would be beneficial to wait until January to forward the payments. Under circumstances, where there is a possibility of higher income being generated in the forthcoming year, than tax consultants resist clients from pre-paying the January mortgage installment in December.
- Business Cost
- Bearing the business expenses in a timely manner is also advised by tax experts. These costs are deducted from the taxable sum and then lesser taxes have to be paid by people. Additional deductible interest can be claimed by corporations, as a result. Therefore, foregoing the payment of business expenses would not be in the best interests of companies, as they would lose the money through taxes anyways. Higher interest amounts may have to be paid on the pending payments.
Purchase of equipment required for running the business and utilizing the gear before the end of the year can also help to deduct taxable figures and claim tax returns on the incurred expenditure.
- Investing in the newly-founded accounts
The government has introduced 2 schemes, namely the myRA account and Achieving a Better Life Experience or ABLE plan for the lower income group for tax-saving purposes.
People from the lower earning segment can invest in the myRA account as a part of their retirement planning and also avail tax-free benefits.The ABLE account is designed for the disabled population, where by the contributions may not be free of taxes, but certain expenses advanced from the account are declared tax-free.
- State Tax-Filling of same-sex Couples
Marriages between persons of the same sex has now gained recognition. Such couples can from now onwards file tax returns jointly at the state level too similar to the federal tax structure. The federal tax filing can be deemed as the basis of state taxes, thereby easing the entire process for the concerned population class.
Blog written by Liz Soria #helpquickbooks
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