Merry Christmas Everyone!
:biggrin:
Does anyone want to share a great end of year tax tip that most people miss?
Merry Christmas Everyone!
:biggrin:
Does anyone want to share a great end of year tax tip that most people miss?
Here’s a few quick ones,
(1) Make sure that you take every single deduction that you have coming…no more, no less.
(2) If you can afford it, make the January 2006 payment on rental properties during December 2005…make sure there is enough time for the mortgage company to receive it and post it.
(3) Make sure your 2005 taxes are paid before December 31st.
(4) Cash your January 2006 rent checks after 1 January…that will post as 2006 income.
(5) Don’t forget your depreciation:
(a) on the structure
(b) the appliances
(c) the carpet
(d) that new roof
(e) etc., etc.
(6) Make sure that you claim all of your utilitilies that you paid on properties (common area lighting, water, etc.)
(7) Don’t forget to subtract any “passive losses” that you might have from your income if you meet the income threshold.
Keith
Thank you Keith.
You gave me some really good tips
[b]>>make the January 2006 payment on rental properties during December 2005…
Make sure your 2005 taxes are paid before December 31st.[/b]
Do you have an active income business? Do your kids ever want something and you say, “Wait until your birthday”, or “Let’s see what Santa Claus brings?”
Normally, your kids’ birthday and Christmas gifts are personal expenses and not tax deductible. However, if you hire your kids to perform some task for you in your active income business, THEN whatever you pay your kids is a deductible expense to your business. Pay your kids a “reasonable” rate for the work they do, have them earn enough to buy whatever it is they want for themselves. The constraint here is that the payment must be reasonable. Paying $100 to sweep the floor – a job that only takes ten minutes – is not reasonable for the work performed.
Now you have just made the money you would have spent on your kids’s gifts a deductible business expense.
Works the same way with an allowance. Don’t give your kid a non-deductible allowance. Instead, pay them to work for you and take a business expense.
Source of funds used to pay expenses can make an otherwise deductible expense non-deductible.
Let’s say you are a sole proprietor. You purchase something that would ordinarily be a business expense, but pay for it from your personal checking account. Because you paid for the item with personal funds, the item is not a deductible expense to your business.
Pay for the item from your business checking account, and the item is a deductible business expense.
This is excellent knowledge.
Don’t forget to claim your mileage to and from your rental property / investment property. At 40.5 cents per mile this adds up quickly.
Don’t forget that mileage to and from business related functions (i.e. viewing potential business properties, to and from REI Club meetings) any TRUE business related function is potentially deductable.
Of course this only applies to your personal vehicle used for business expenses - if you’re writing off the vehicle / depreciation itself you can’t then also itemize the deductions for mileage on that vehicle.
The number one concept (and Dave eluded to this earlier) is that if you can have your expenses legitimately funnelled through the business then do it.
#1 Concept in business - Businesses pay taxes AFTER expenses - Individuals pay taxes BEFORE expenses. Every dollar you pay out of your individual account costs roughly 20% more than if you paid for it out of your business account.