Issue link: https://www.massageandbodyworkdigital.com/i/68165
CUT YOUR 2010 INCOME TAX BILL NOW As a business professional, it's only natural for you to devote most of your business time to developing income and reducing expenses. Yet, it's important to remember the effect that taxes have on those profit dollars. Here are some easy tax-planning tips that will help you maximize your after- tax income for 2010 and beyond. 1. ORGANIZE YOUR RECORDS NOW "If you scramble at tax time looking for receipts and other records to pass along to your accountant, you're probably missing out on some healthy deductions," Blumenthal says. "By keeping your records up-to- date, you'll make your accountant's job easier next April, and an easier job for your accountant means a savings on your tax preparation bill, as well as your taxes." 2. LOOK FOR DEDUCTIONS THAT YOU MAY HAVE MISSED LAST YEAR Many taxpayers miss out on important deductions by waiting until the last minute. "I'm willing to bet that every taxpayer misses at least one deduction on their tax return each year," says Roni Deutch, tax attorney and author of The Tax Lady's Guide to Beating the IRS. "Keep receipts for everything," says Bridget Crawford, professor of law and associate dean at Pace Law School. "The cost of office supplies and Internet services are easy to track, but keep in mind the minor expenses that keep your practice going day to day." 3. FINANCE PURCHASES ON YOUR CREDIT CARDS "Most of the time, financing purchases on your credit card is a bad idea," Deutch says. "However, since the interest paid on business expenses is tax deductible, there are exceptions, especially toward the end of the year when you need to rack up a few more deductions. Simply pay some business expenses or purchase some office supplies on your business credit card before December 31, 2010. You get the deduction on your 2010 tax return, but you don't have to pay the bill until next year." 4. TAKE ADVANTAGE OF SECTION 179 Most new business equipment can either 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. The current deduction limit is $250,000. "If you're not taking advantage of the Section 179 deduction, you're missing out," Deutch says, "even on small capital purchases." Taking the 179 deduction is easy. Simply fill 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 year-end in order to lower this year's tax bill. Purchases made right up to December 31, 2010, are eligible for the Section 179 tax deduction. 5. COMBINE PLEASURE TRIPS WITH SOME BUSINESS If you're planning any pleasure trips this year, consider adding in a little business. Can you visit a therapist or professional organization in your destination city to discuss business techniques that may help to improve your practice management? When you travel away from home on business, you may deduct fares, meals, lodging, and incidental expenses (as long as they are reasonable). The definition of "away from home" is any trip that takes enough time that the traveler could reasonably be expected to need sleep or rest. The definition of "home" is the location of your practice. 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. MAXIMIZE YOUR TAX- DEFERRED RETIREMENT ACCOUNT EARLY Make the maximum allowable deposits into your 401(k) or IRA account as early in the year as possible. 74 massage & bodywork january/february 2010