Not much time left for year-end tax planning, but there are still some things you can do. Let’s get to it, because you don’t want to spend your time reading a blog! You’ve got work to do.
Tip #1: If you don’t have a business, start one. If you start one today, you can immediately take a deduction for business expenses. A business expense is anything that is ordinary and necessary to the production of income.
Some overnight biz ideas:
* Clean out your garage and sell it on eBay. Make the commitment to continue to grow this business and demonstrate it by having a plan to regularly post items for sale on eBay.
* Sell stuff on Craig’s List, your own website, or any of the other possible ‘other than eBay’ sellers. You might be surprised how quickly you can make some cash and how easy it is to turn it into a business.
* Set up a blog with some affiliate links. We’ve talked about this one at length on the forum here. If you’ve got something you really like – talk about it! But make sure there is a business idea behind it. For example, if you love shoes, set up a blog about shoes. Put links on the blog so you can make some money and you just started a legitimate business.
* Join an MLM, especially one that is set up in a way to get you quick cash. Some models are more front end loaded then others. If you want quick cash, look for those. If you’ve got a true business and you’re running it like a business, you’ve got deductions too.
Tip #2: If you’ve got a business, accelerate any needed expenses.
You don’t need to go buy a bunch of equipment that you really don’t need. You can simply prepay some of your regular expenses like rent, insurance, taxes and others. In general, you can prepay these expenses for up to 3 months and take the deduction, even if you’re a cash basis tax payer.
Tip #3: Be smart about your state tax payment.
If you are an individual taxpayer who takes a deduction for state income tax paid (Schedule A), and you’re going to do that in 2009, then make your 1/15 stated estimated tax payment in 2009. It’s due in 2 weeks, so why wait? Take the deduction now!
Tip #4: Lots of depreciation options this year. Plan ahead!
If you buy a fixed asset (equipment, furniture, etc), you can Section 179 it up to $250K (take an immediate write off), you can get bonus depreciation of 50% in the first year (if it’s new), take regular depreciation or some combination of all three.
What’s the best answer? It depends! A Section 179 can’t create a NOL (net operating loss) and bonus depreciation only works if it’s new equipment. Take a look at what’s best for you
Tip #5: NOL for 2009
You can take a net operating loss carryback for 5 years from a loss in 2009. You also were able to go back with 2008 as well. Many people took advantage of that, only to discover their loss in 2009 was even bigger. That’s okay, because the IRS has a way for you to unwind your 2008 carryback, so that you get the bigger one in 2009.
If you’re planning to take advantage of a loss, then make it a big one! This is the year to load up with every expense you can and push income to 2010.
Look for lots more year-end tax tips in the coming days. We go into all of these (and more) much more indepth as part of our twice monthly coaching program at US TaxAid. Even better, when you become one of our clients, you get the coaching for free!