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We hope that by now, you have had the chance to review our exhaustive tax savings tips.
If not, go to our Last Minute Tax Savings section first.
The tips found in that section should have answered most of your questions on how to maximize tax savings in 2008.
This section is an added bonus to you, our valued client. It is basically a summary of the tips that were discussed in the Last Minute Tax Savings section as well as a discussion of other obscure tax saving tips...
Cash Is King
Teaching you tax saving tips that do not depend on you spending your cash is of outmost importance. We can tell you to spend $10,000 on a computer system and expense it all. You do not pay taxes, but you will be computer-rich and cash-poor.
Therefore, there are only a couple of non-cash areas of tax savings. Here is a few that you should consider:
Tips for Individual Taxpayers
Charitable Contributions: You need your old, large receipts from Goodwill, Salvation, St Vincent de Paul, etc. Make sure you donate the stuff that are on those 4 year old plus receipts. You benefit twice. You havent spent a dime and you uncluttered your house.
Entertainment: The requirement for entertainment is to make sure you write a "memo" when it occured. The memo should have these basic information:
(1) Who did you entertain?
(2) Were they a client, vendor, employee, or an independent contractor of yours?
(3) When did the entertainment, dinner, etc. occur?
(4) What was the nature of discussion?
As usual, documentation beats conversation any day of the week.
The magic number to remember is $75.00. Any entertainment event that cost less than $75.00 does not require a receipt. Any event that cost $75.01 and above, save that receipt.
Tolls and Parking Meters: A reasonable amount is allowed. Keep the receipts and our experienced staff will determine the level of write-off that you can take advantage of. One tip here is keeping and maintaining a Business Mileage Organizer that has a column for tolls and parking. This invaluable tool is something that we give all our clients. Make sure you ask for your complimentary copy...
Bellhops, Hotel Room Maids, Etc: Keep good notes on business trips. We are aware that bellhops and hotel room maids dont give receipts. Dont forget to tell our staff about that business trip and our staff will determine the level of writeoff in this area.
After the non-cash tips discussion above, what is essential in making sure that you preserve your cash?
Get the wrong advice and you will find your wallet getting lighter.
Our advice to you is simple...
Save for the Future: This has been our mantra from the very beginning. W2 earners should maximize on their 401(k) and business owners their Solo(k). Yes, we know that people are wary of investing in stocks, but there are numerous investment and savings vechicles that can fit your 401(k) program. And depending on your personal situation as it pertains to retirement, stocks can still be solid investments for the future.
Live within your Means: Spend only on the necessary things if you are of average means. Spend one or two upgrades higher if you are above average means. Therefore, if you notice you need something before year end, spend it.
This is especially true for the business person. If the purchased item is something that the business can benefit from, or more importantly, something that the business cannot do without, it would be a worthwhile investment.
Tips for Businesses
Cash Basis Taxpayers: The classic and true advice is to pay your bills. As an example, this allows a $30k net income to drop to zero, if you paid by cash in the bank or credit cards.
Accrual Basis Taxpayers: There is some magic involved in finding a bill you did not notice and saving on your taxes that way. The obvious catch-22 is having large receivables. You want to avoid those as it can cripple cash flow. If you have large receivables and generally pay your bills on time, accrual basis accounting may not be for you.
