Issue link: https://www.massageandbodyworkdigital.com/i/557366
4. TAKE ADVANTAGE OF SECTION 179 Most new business equipment can be depreciated over its useful life or expensed immediately under Internal Revenue Code Section 179. This provision of the law permits you to deduct the full cost of capital assets in the year of purchase up to a maximum deduction of $25,000. "If you're not taking advantage of the Section 179 deduction, you're missing out," Deutch says. Taking the 179 deduction is easy for you or your accountant. Simply fi ll out part one of IRS form 4562, available free from the IRS (www.irs.gov). Attach it to your tax return as you would any other additional form, such as a Schedule C. Consider making any capital expenditures you've been planning before yearend in order to lower this year's tax bill. Purchases made right up to December 31, 2015, are eligible for the Section 179 tax deduction. 5. COMBINE BUSINE SS WITH PLEASURE If you're planning any pleasure trips this year, think about adding in a little business. Consider taking a vacation that's also a continuing education opportunity. Perhaps there's a massage and bodywork conference in an appealing location where you can learn and relax. When you travel away from home, you may deduct fares, meals, lodging, and incidental expenses (as long as they are not extravagant). The defi nition of "away from home" is any trip that takes enough time that the traveler could reasonably be expected to need sleep or rest. The defi nition of home is your regular place of business. When the primary purpose of the trip is business, you may deduct travel expenses even if you enjoyed some nonbusiness extracurricular activities. If more than 50 percent of the time you spend away from home is spent on pleasure, the cost of transportation will be disallowed. However, if more than 50 percent of your time is devoted to business, all travel expenses are deductible. 6. MA XIMIZE YOUR TA X-DEFE RRED RETIRE ME NT ACCOUNT EARLY Make the maximum allowable deposits into your 401(k) or IRA account as early in the year as possible. This is universally regarded by fi nancial experts as being one of the most important tax-saving techniques. "When you have a stack of bills, it's easy to forget the person you should be paying fi rst: yourself," Crawford says. "I don't mean a salary. I mean contributions to your retirement account, even if you can only manage $50 to $100 each month. And don't wait until next year, hoping that you'll have extra cash; you want to ride that train of compounding interest as long as possible." 7. MAKE THE MOST OF CHARITABLE CONTRIBUTIONS If you plan to make charitable contributions this year, consider donating long-term appreciated securities instead of cash. You'll receive a full fair market-value deduction and pay no capital gains tax on the securities. You can also sell depreciated securities for the tax-deductible loss and then give the cash from the sale to charity. 8. CONSIDE R CHANGING YOUR BUSINE SS STRUCTURE Are you operating your business as a sole proprietor? "Many professionals and small- business owners operate as sole proprietors, unaware that net profi t from a sole proprietorship is subject to self-employment tax," says Enrolled Agent Karla Dennis. "Self-employment tax is comprised of social security tax and Medicare tax. The current social security tax rate is 12.4 percent and the Medicare rate is 2.9 percent. By switching to a corporation or a sub- chapter S corporation, you may be able to eliminate a great chunk of this tax." Dennis points out that when switching to a corporation, the taxpayer must take an adequate salary and pay the appropriate employment taxes. "But this will cost far less than exposing all net income to social security and Medicare taxes," she says. "Medicare is taxed against all income and never caps out. The social security tax stops when your net income reaches $118,500." 94 m a s s a g e & b o d y w o r k s e p t e m b e r / o c t o b e r 2 0 1 5