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The end of 2018 is rapidly approaching and we have your Year-End Tax Planning Checklist:

 

  • W-2 Reporting – Make sure that officer health insurance is included on the W-2. Contact your payroll company before your last payroll to include this information on your W-2. It is free now to add the information, but they will charge you for it after the last payroll.
  • Officer Salary – Make sure you have officer salary that is adequate, and that your payroll company processes this payroll before year-end.
  • Retirement Accounts – Make sure you have maximized your salary deferral for your retirement plan. Do not forget to calculate and pay the company match for your salary deferral.
  • Section 179 – Depreciation for equipment and some vehicles is available up to $1,000,000.
  • The IRS issued guidance in 2016 that business owners can expense purchases up to $2,500 and this has not changed.
  • Credit Cards – Payments made by credit cards are considered paid for accrual AND cash basis taxpayers. Cash basis tax payers do not have to pay off the credit card balance to take the deduction.
  • Estimated Tax Payments – The amount of taxes which includes state income taxes and real estate taxes on Schedule A is limited to $10,000. Paying your state tax by December 31 may not be a benefit for you in 2018.
  • Cash Basis Taxpayers – Remember that your income is what you received less what you paid for the year. Accrual basis income statements must be analyzed on a cash basis to have an accurate number for net income.
  • Accrual Basis Taxpayers – Review your accounts receivable and write-off any bad debts to avoid paying income taxes on money you will not receive. Remember to enter all bills with 2018 dates as a 2018 bill. These purchases are deductible in 2018.
  • Inventory – If you maintain inventory it is important to have an accurate count at the end of the year. Excess inventory on your books can equal excess tax paid by you, so make sure this is accurate at year end.
  • Expense Reports – If you paid bills personally for the business in 2018, then turn in an expense report and repay the business expense. Cash basis taxpayers must pay the expense in 2018 to take the deduction in 2018.
  • 1099 Reporting – The IRS has increased penalties on failure to file 1099’s and other forms. The potential failure to file a 1099 has increased to $260 PER 1099. If you fail to provide a 1099 to the subcontractor that is $260. If you fail to file to the 1099 with the IRS that is another $260. That is $520 per missed 1099! Our firm can prepare 1099’s for you this year. Review your payments for the year so that all subcontractors and other service providers that require a 1099 are identified.
  • Tax Projections – Review your tax projections and make sure that you have analyzed the recommendations prepared for you. Your tax projections are needed ASAP.

 

If you have any questions on the year-end tax planning checklist and your tax situation, contact us soon.

Our team of experts can help you with your business and personal tax preparation.

Ed Lloyd & Associates, PLLC