It's Not Too Late

Even though there's only a week left in the year that wasn't supposed to happen (according to the fear mongers who claimed the Earth would explode at midnight on 1/1/00), there is still time to reduce your 2000 taxes. These aren't new ideas, yet they are often overlooked.

PrePay
If you pay for some of your 2001 expenses by 12/31/00, you will be able to deduct those payments on your 2000 tax return, giving you the tax savings a year earlier than if you were to pay them in 2001. The prepayable expense nearest & dearest to my heart is tax preparation costs. You can pay your preparer by December 31 and deduct that fee a year earlier. Tax preparers don't mind receiving that money early because whatever comes in will be spent on supplies for the upcoming tax season.

Section 179
If you haven't already used up your $20,000 Section 179 expensing election for new (to you) business equipment, you should hurry up & go shopping. Also, let me clear up one big misconception about this very lucrative deduction. It's not only necessary to pay for the equipment before the end of the year. You also have to put it into service by December 31 in order to claim the Section 179 deduction. This means that you may not want to rely on online shopping at this late date.

Credit Cards
Many people aren't aware that IRS treats purchases made with credit cards the same as those made by check or cash, regardless of when the credit card is actually paid off. That means that you can charge expenses and asset purchases in December and claim them on your 2000 tax return, even if it takes you several years to pay them off. In addition, even if it's a personal credit card, any finance charges incurred on business purchases are also deductible on the same business schedule (C, E, F, etc) as the underlying purchase. If you use the credit card function in Quicken or QuickBooks, where you enter the individual charges, these will be added into your 2000 expenses.

KMK

Labels: 179

- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 12/25/2000 02:08:00 PM Send this post: