StatenIslandChamber

As a business owner, you know the price of inaction is missed opportunity. That’s true in tax planning, too, which is why now is the time to start taking actions to save money on your 2012 federal income tax return. Here are ideas to implement before year-end.

Know your basis. As a partner or a shareholder in an S corporation, your investment in your company is a factor in determining how much of a business loss you can deduct on your personal income tax return.

Draw up loan documents. To preserve interest deductions, loans you make to your business should be documented, with an interest rate and maturity date specified. In addition, reference specific loans in your corporate minutes.

Pay health insurance premiums. When you own 2% or more of your S corporation, premiums you pay personally for your health and long-term care insurance must be reimbursed to you in order to get the most benefit. When accounted for properly, premiums are included on your Form W-2 as wages, and are deductible on your individual income tax return, whether you itemize or not.

Establish a retirement plan. Already have a retirement plan? Verify that you’ve provided employees with required annual notices. Keeping your plan compliant with the law keeps your deductions safe.

Check your estimated tax liability. Increasing the amount of withholding from your last few paychecks of the year can help minimize estimated tax underpayment penalties. While you’re reviewing your tax situation, make sure you’ve drawn a reasonable salary.

Put equipment to work. To benefit from Section 179 and bonus depreciation expensing, assets you purchase must actually be placed in service — that is, ready and available for use in your business.

We’re here to help you turn tax-saving ideas into action.