7 Last Minute Tax Tips That Will Save You Money
When Tax Day comes, will you be ready? April 17 is fast approaching, and while filling out all those forms can be a real slog, there is no reason why, even if it’s down to the wire -- no judgment, we’ve all been there -- you can’t make your taxes work for you and save you some money.
Jeff Rose, the CEO and founder of Alliance Wealth Management, shared his top three last minute tips with Entrepreneur.
1. Fund an individual retirement account (IRA).
Remember that you have until April 15 to make a contribution that will reduce your taxes for 2017. If you’re married, you can also file an IRA for your spouse. “If your spouse doesn't hold a job outside the home, he or she can qualify for a full IRA contribution and deduction," Rose says. "Both you and your spouse can contribute up to $5,500 each, or $6,500 each as long as one has sufficient earned income to cover both contributions.”
2. Fund a health savings account (HSA).
This is an account that is similar to an IRA in that you can make a tax-deductible contribution by April 15 for 2017. “The limit is $3,400 for an individual, and $6,750 for a couple or family,” Rose says. “There's also a $1,000 catch-up contribution if you're age 55 or older.”
3. Adjust your withholding.
As we head into tax day, Rose suggests making sure that your withholding taxes are as closely aligned as possible with your liability -- the amount of taxation an individual or business has to pay based on the current laws. “If you don't pay enough, you'll owe a big tax bill next year," he says. "But if you over-withhold, you're giving the government free use of your money for up to one year.”
So, with that in mind, what else do you need to know heading into tax day?
4. Make the most of Section 179.
For equipment costing up to $500,000, your company can treat it as a business expense in the year that it was bought. You might think that it just applies to something such as a tractor for a farm, but it can apply to anything that is required to run your business.
5. Did you hire any family members?
If your kids are under 18 and they helped out around the office this year, you can deduct that. According to the IRS, “payments for the services of a child under age 18 who works for his or her parent in a trade or business are not subject to social security and Medicare taxes if the trade or business is a sole proprietorship or a partnership in which each partner is a parent of the child.”
6. Did you incorporate your business?
If so, it’s possible that you can save some money based on your company’s status. If you have an LLC (limited liability company), you have the option to be taxed as if you weren’t incorporated by designating yourself as a disregarded entity. Or, if you designated it as an S-corp, your salary will be taxed, but you can make distributions to yourself, which are not.
7. Keep track of your transportation.
If you’re just starting up and have been using out-of-pocket expenses to travel for work, you’re in luck -- you can deduct that time logged going to sales calls and investor meetings. Figure out how much time you used your car for business and expenses such as gas, insurance and anything you needed to get fixed along the way and deduct accordingly. Any money spent on meals and moving can also fall in this category.