In the News: Year-End Tax Moves for Businesses and Individuals
As the calendar turns to December, AICPA experts have been speaking to reporters to educate the public about tax moves they can make before the end of the year. A number of these tips involve tax breaks that will either expire, or whose futures are uncertain and the steps that businesses, individuals and homeowners can take now to save themselves money when they file their 2013 return.
Jeffrey Porter, chairman of the AICPA’s tax executive committee, spoke to CFO.com about corporate tax provisions which are set to expire after 2013.
According to Porter, one of the most important of the temporary tax provisions set to expire after 2013 is the 50 percent bonus depreciation, which was enacted as part of economic-stimulus legislation.
“Let’s say you’re a CFO, and you know you need to purchase a million-dollar piece of equipment. If you purchase it before the end of the year, you can get a $600,000 write-off in the first year,” says Porter.
Porter believes that the 50 percent bonus depreciation provision is one of the least likely 2013 business extenders among the 55 expiring business and individual tax breaks to be extended, increasing the importance to take advantage of it this year.
Ted Sarenski, CPA/PFS tells Reuters that he begins reaching out in mid-November to set up end of the year face-to-face meeting with clients for a big-picture account of their financial situation and advise them on steps they can take before the end of the year and how to plan for changes in the current year.
This year, in addition to annual topics like portfolio performance and investment strategy, Sarenski is discussing the implications of the Affordable Care Act, new Medicare rules and other changes in tax law that will affect clients' budgets in 2014.
Stressing the role CPAs play working with their clients year-round, Sarenski says "We (already) talked ... about some of the new taxes that cropped up. It gave us a talking point at mid-year. At year-end, we're going to remind everybody of those same things again."
Michael Goodman, CPA/PFS also stressed how maintaining connections with clients year-round helps the planning process and prevents surprises at year-end.
“We have deep, meaningful relationships with our clients,” says Goodman. “The investments don't mean anything until you understand what they're trying to do.”
Erin Carlyle reports in Forbes that with just a few weeks left in 2013, there are a few things homeowners should consider to maximize their tax benefits for 2013. Michael M. Eisenberg, CPA/PFS and Jordan Amin, CPA and former chair of the AICPA’s Financial Literacy Commission, provide homeowners with the following tips they can use before year end.
The IRS offers a tax credit for making improvements to a home for energy efficiency. This can include insulation, air conditioning or heating units and other upgrades, which could allow the homeowner for a tax credit (a subtraction from taxes owed) of 10% of the cost, with a lifetime maximum of $500. Making the change before the end of the year is advised because, according to Eisenberg “[the credit] may be expiring at the end of the year.”
Amin advises people who expect their incomes to go up may want to push their January mortgage payment into December. “If you’re going to make that payment in the next 30 to 90 days anyway, it’s almost silly not to accelerate and get the deduction, especially if your income is going to change,” he said.
What are you advising your clients to do before the end of the year to reduce their tax burden for 2013? Let us know in the comment section.
James Schiavone, Media Relations Manager, American Institute of CPAs.
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