As the holidays are quickly upon us, I’m sure the last things you are thinking about are your taxes. But taking a moment to assess your tax situation NOW could pay off big in 2010. Here are some year-end tax tips that could drastically change your tax situation.

Tips for Business Owners:

• Get Current. One of the most important tax tips I can give is to make sure your accounting is up-to-date. It is important that you have a complete understanding of your financial situation. Scheduling a year-end planning session with your accountant is a good idea and a good start.
• Procrastinate. I know this may sound crazy, but hear me out. If (and only if) your cash flow can sustain it, then wait until January to bill those end of the year clients. Any cash you receive in December must be included on your 2009 tax return as income, but if you wait just a few more days you can defer payment of taxes on that income for another year.
• Shop ‘til you drop. Purchase items that your business will need in the near future. Again this is if your cash flow permits. Some things you should consider are office supplies, equipment purchases or pay some bills early (i.e. business cell phone bill, utilities, etc). This year the sales tax and excise tax charged on qualified motor vehicle purchases is deductible.  So if you are in need of a new vehicle, it would be beneficial to do so by year end.
• More blessed to give. We’ve all heard the saying, “it’s more blessed to give than to receive”. And it’s true in more ways than one. Push an early 2010 charitable donation back to 2009, which allows you to take the deduction in 2010 instead of waiting until 2011. Be sure you get a receipt to support the tax deduction.
• Sock it Away. This is a great time to make payments to your retirement plan or setup one to reduce your business income before the year ends. Meet with your financial planner to verify the contribution limits and deadlines.

Tips for Individuals:

• Job-related moving expenses
• Job-skill improvement classes (including travel)
• Professional and investment publications
• Union or professional dues
• Job-hunting expenses (including travel)
• Child care expenses
• Home office deduction – working from a home-office
• New or used clothes, toys, and household goods given to charity
• Fees for tax or investment advice and tax return preparation
• IRA fees
• Client gifts

Note: These year-end tips will apply differently to each individual’s situation and accounting method. Seek professional advice to determine the best strategy for your transactions for tax purposes.

As the holidays are quickly upon us, I’m sure the last things you are thinking about are your taxes. But taking a moment to assess your tax situation NOW could pay off big in 2009.

Here are some year end tax tips that could drastically change your tax situation.

Get Current. One of the most important tax tips I can give is to make sure your accounting is up-to-date. It is important that you have a complete understanding of your financial situation. Scheduling a year-end planning session with your accountant is a good idea and a good start.

Procrastinate. I know this may sound crazy, but hear me out. If your cash flow can sustain it, then wait until January to bill those end of the year clients. Any cash you receive in December must be included on your 2008 tax return as income, but if you wait just a few more days you can defer payment of taxes on that income for another year.

Shop ‘til you drop. Purchase items that your business will need in the near future. Again this is if your cash flow permits. Some things you should consider are office supplies, equipment purchases or pay some bills early (i.e. business cell phone bill, utilities, rent, etc).

More blessed to give. We’ve all heard the saying, “it’s more blessed to give than to receive”. And it’s true in more ways than one. Push an early 2009 charitable donation back to 2008, which allows you to take the deduction in 2009 instead of waiting until 2010. Be sure you get a receipt to support the tax deduction.

Sock it Away. This is a great time to make payments to your retirement plan or setup one to reduce your business income before the year ends. Meet with your financial planner to verify the contribution limits and deadlines.

That covers the business owners, now I hear the individual taxpayers saying, “What about us?” Here are some deductions for individuals that are often times overlooked.

1. Job-related moving expenses
2. Job-skill improvement classes (including travel)
3. Professional and investment publications
4. Union or professional dues
5. Job-hunting expenses (including travel)
6. Child care expenses
7. Costs associated with operating a business from a home-office
8. New or used clothes, toys, and household goods given to charity
9. Fees for tax or investment advice and tax return preparation
10. IRA fees
11. Client gifts

Note: These year-end tips will apply differently to each individual’s situation and accounting method. Seek professional advice to determine the best strategy for your transactions for tax purposes.

SECRET TAX TIP #6

Avoid Extra Tax With A Wise Business Purchasing Plan!

Avoid the dreaded Alternative Minimum Tax by postponing purchases of depreciable assets or leasing rather than purchasing depreciable assets in years when you have high income and itemized deductions.  The alternative minimum tax is calculated by adding to your alternative minimum tax base any accelerated depreciation taken in a tax year.

Most busy business owners are not paying attention to the tax consequences and real money saving ramifications of their purchases.  In many cases, armed with up-to-date sales and revenue figures (especially 6 or 8 months into the year) you can properly plan when the best time would be to purchase that next “big thing” you need to run your business.  And again, in most cases, you can wait a couple of months and buy after the first of the year or in other cases, spend the money before December 31st.  Hey, on large purchases, it really does make a huge difference on your tax return!

SECRET TAX TIP #7

Defer Taxes Owed By Following The Installment Sales Rules

Use the Installment Sales rules to defer the tax you have to pay when you sell property by structuring your transactions so that you receive payments from the sale in more than one year.   For example, if your gain on the sale of property would be $40,000, you would owe tax on only half of that amount if you arranged to receive only half of the cash for the sale this year.

Too often, greed sets in and people want to get paid all up front.  But, if a deal is structured properly, getting paid some now and some over the next couple of years tends to dramatically help on the tax side of things.  Now of course, you don’t know what is going to happen with your financial picture in the future, but you might as well defer as many tax dollars as possible now and make other adjustments with future money in those coming years.  If given a choice, most of us would choose to give Uncle Sam his money later rather than earlier.

Now, those are 7 STRATEGIC ways you can benefit from the existing tax code and increase your profits this year.  But obviously there are thousands more tax savings strategies available.  Depending on your specific tax situation, you can use them all (if they apply) if you wanted to.