Expecting a tax bill?
Fourth quarter is officially here. Are you on target for a successful tax season? In other words, do you know if you have a refund? Or will you be surprised come April 15th?
By the end of the 3rd quarter, all our clients (more than 450!) know where they stand for the upcoming tax season. We spend 4th quarter working with them on ways to donate less money to Uncle Sam.
There are a few very simple ways to lessen the amount owed.
- Ensure that you are maximizing your employer-sponsored retirement plan options. For a Simple IRA, you can deduct up to $13,000 if you are under the age of 50. If you are over 50, the maximum deduction is $16,000. If you have a 401k, you can deduct up to $19,000 if you are under the age of 50. If you are over 50, the maximum deduction is $25,000. Just think: You paid yourself and saved taxes, too.
- If there is any equipment that you need to buy, do it now. Don’t wait until after the new year if you are anticipating a tax bill. Regular shop equipment like a tire changer or a wheel alignment machine will get you a 25-30% of what you spend in tax savings, depending on your shop’s location. For vehicle purchases, you can write off 100% of pick-up trucks over 6,000 GVW. You can write off $25,000 of SUVs over 6,000 GVW, and up to $12,000 of small cars, trucks, and SUVs, as 25-30% savings. PLEASE NOTE: We do not advocate buying this equipment if you were not already planning to do so in the near future. But if your business had plans to purchase any of these items, doing so before the end of 2019 will certainly decrease the amount you owe.
- Reward team members that deserve to be rewarded. Reed’s belief system is no Christmas/Holiday bonuses, only performance based bonuses. You can save 25-30% of what you spend.
- Remember, sometimes paying the taxes is cheaper than avoiding the taxes.
Each shop will have its own individual circumstances and ultimately you will have to decide what works for you. This is why our clients know the status of their upcoming taxes by the end of 3rd quarter.