5 Tips for Tax Savings

As we continue the march toward April 15, you might be thinking about ways you can minimize the tax liability that you face as both an individual and a business owner.

It can be a complex topic, here are five tips that could help you reduce your tax burden.

  1. Know your tax bracket. // This is the starting point for any tax planning. Tax rates for 2015 have not changed from 2014, and rates for 2016 are currently not expected to change from the current year.
  2. Be smart when timing income and deductions. // Many tax benefits are tied to or limited by adjusted gross income (AGI). If you don’t expect to be subject to alternative minimum tax (AMT) in 2016, deferring income to next year and accelerating deductible expenses into the current year is usually a good idea.
  3. If you haven’t already, begin making contributions to your company’s 401(k) plan or an IRA. 
  4. Business owners should maximize available tax-advantaged retirement plans. // There are a number of available plans to consider if you aren’t already doing so. Options include profit sharing plans, Simplified Employee Pensions (SEP), Simplified Incentive Match Plan for employees (SIMPLE), 401(k) and defined benefit plans.
  5. Consider making equipment business purchases. // Congress hasn’t reinstated all of the accelerated benefits of bonus depreciation and higher limits of Section 179 for 2015.  However, if a business needs equipment to run effectively, invest in it. The higher tax deductions will be useful if these rules are extended.