12/6/2005
Year End Tax Tips
by Vonelle Vanzant, CPA, Center Director, UA Fort Smith SBDC
For calendar year tax filers, 2005 is drawing to a close. But there is still time to do some tax planning and, perhaps, reduce your tax bill. For instance, if you use the standard mileage rate to determine your deduction for business vehicles, take the time to break out the business miles driven between September and December from the miles driven all year. The IRS raised the mileage rate for business miles from 40.5 to 48.5 cents per mile for miles driven September through December.
Also, where it makes good business sense, consider deferring sales or collections into 2006 and accelerating purchases or payments into 2005. Your accounting method will determine how these deferrals or accelerations are handled. If cash is a little short, consider using your business credit card to make year-end purchases. Too, subject to your particular situation and other limitations, consider buying and placing in service equipment you need in 2005 rather than putting it off until 2006. By doing so, you can take advantage of the IRS Sec. 179 deduction in 2005 to help reduce your tax bill.
Do check with your tax accountant to see which of these tips and others may help you reduce your total tax bill. Other helpful information can be found at the IRS web site at www.irs.gov or by attending ASBDC sponsored IRS tax seminars.
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