Don’t forget about the little things. Sometimes, it pays to review a few tried-and-true tax planning tips. As year-end approaches for most folks, here are some thoughts to maximize cash flow and minimize taxes. If you are a fiscal-year company, these ideas can still apply.
- Take advantage of 100% bonus depreciation by placing assets in service before December 31, 2011. For assets placed in service during calendar 2012, bonus depreciation reverts to 50%.
- Review ability to expense capital assets by taking Section 179 deductions. Unlike bonus depreciation, used assets can qualify for Section 179 treatment.
- Review ability to take Section 179D deductions for energy-efficient systems in commercial buildings. Qualified systems can include interior lighting, heating, cooling, ventilation and hot water systems, and the building envelope.
- Review available tax credits. There are several fuel tax and alternative energy credits that may apply to your company.
Specifically, check your ability to claim the retention credit under the HIRE Act. The HIRE Act provided payroll tax forgiveness to employers that hired certain unemployed individuals after March 18 through December 31, 2010. The HIRE Act also provided for a retention income tax credit up to $1,000 for each qualified employee who works for the employer for at least 52 consecutive weeks. So, check your records. If you claimed payroll tax exemption for certain 2010 new hires, and the individuals were employed for at least 52 weeks, you will be eligible for an income tax credit.
Lastly, new tax laws are being bantered about on a daily basis. We’ll monitor and provide updates, but be on the look out for potential payroll tax reductions for employers, as well as extended reductions for employees. If passed, the current plans call for almost 50% reduction of Social Security tax for both employers and employees. While employees may not yield significant cash flow benefits, this temporary reduction should help employers quite measurably.
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This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.