As in years past, many businesses are finding difficulties in tax planning due to the expiration of extenders that gave temporary tax breaks. Additionally, the nuances of the Affordable Care Act (ACA) require careful insights to reduce taxability. However, there are a number of new regulations that businesses should consider when formulating their year-end tax strategy. Below are a few.
Bonus Depreciation
Last year Congress enabled a 50% bonus depreciation which was to last through 2015. That depreciation rule has been extended through 2016, specifically for transportation and other business properties. Using these effectively can aid businesses in reducing taxability significantly.
Code Sec. 179 Expensing
Any new or used business properties that fall under Code Sec. 1245 depreciation rules can be written off (up to $25,000). This may change by the end of the year if the 2014 provisions are not extended (which allowed an expense write off of up to $500,000). It is best to check with a tax service or advisor when incorporating this into your businesses planning.
Research Tax Credit
Every year thousands of businesses utilize the Research Tax Credit as effective tax leverage. It recaps several benefits including:
- Tax rate reductions (including dollar-for-dollar state and federal reductions in income tax liability)
- Cash flow improvements
- Increases earnings-per-share
Other Beneficial Business Extenders
There are a number of other tax provisions that businesses may do well to investigate for the 2015 tax year. Such include:
- New Markets Tax Credit
- Work Opportunity Tax Credit
- Employer wage credit for active military
- Provisions in Subpart F
- Empowerment zones
- Indian employment credit
- Small Business Stock
- S Corp Built-in Gains
- Small Business Health Care Tax Credit
If you are trying to make the most of your business’s tax planning, hire a tax professional to review your plan. Their insights may save you money, time, and prove to be a valued asset in the future.
Securities and advisory services offered through NATIONAL PLANNING CORPORATION (NPC). Member FINRA/SIPC a Registered Investment Adviser. National Tax & Financial Network Inc, Pacific Tax & Financial Group Inc and NPC are separate and unrelated companies.
NPC does not provide tax advice.