SILKIN MANAGEMENT GROUP: SOME MORE IDEAS ON YEAR END TAX PLANNING

Silkin Management Group articles on our various Silkin Management Group blog sites have, over the last month, presented many ideas and strategies for year end tax planning. Part of those discussions surrounded whether or not certain tax rates would be going up or staying the same. With yesterday’s extension of the Bush tax reductions, we now know that tax rates will not be changing for the next few years.

With that in mind, here are three key things to consider in your year-end look at taxes and items that we recommend all Silkin Management Group clients review for their own situation.

• Have you taken advantage of retirement accounts? You can shelter income and profits in qualified retirement accounts. There are virtually no rule changes on this for 2010. If you have or can set up a Simplified Employee Pension plan (SEP) you can, if you qualify, contribute up to a maximum of $49,000. 401K’s also offer the ability to shelter income from taxes, although less than a SEP.

• Health care coverage. As we’ve discussed in numerous Silkin Management Group blogs, there are many potential tax advantages and incentives with the new health care legislation. There are different rules if you are self employed versus having a corporation, so check with your accountant on this. But it is certainly worth looking into for potential tax savings and tax credits.

• Equipment purchases. This is another item we discussed in more detail in Silkin Management Group blogs last month. There are new expensing rules that are very advantageous for purchasing new equipment or upgrading older equipment. Rather than a slow depreciation schedule as past rules dictated, you can now expense up to $500,000 in the first year of purchase. That could be a very significant tax savings.

There are more tax strategies that you can look at and that we have discussed in previous Silkin Management Group blog articles. And the items mentioned above have been gone over in more detail in some of these articles as well.

Get with your accountant and make sure you are taking full advantage of the year end strategies that are available to you. It could save you a lot of money in taxes.

Gary Crawshaw
Silkin Management Group Consultant