Top 3 Tips to Lower Your Taxes before December 31st!
I don’t want to rush you through the holidays, but you only have 2 MORE WEEKS to lower your taxes for 2016. Eeeeeks!
So slug down your almond-milk-egg nog, put down the wrapping paper, and check out 3 of the best ways to lower your taxes by December 31st.
Top 3 Tips to Lower Your Taxes Before December 31st:
(Please note that I am NOT an accountant so you’ll want to check with your own accountant for the MANY ways you can lower your taxes. These are just 3 ways to get you started with lots of Legal Love™.)
1. Create a spreadsheet with ALL of your business expenses from 2016 – every last one!
Yep, if you haven’t been doing it already, gather up all your receipts from anything you have spent money on for your business and keep track of them in a spreadsheet. Your accountant will be able to balance your expenses against your income which can REDUCE your 2016 taxes.
Nope, that doesn’t mean the boxes of gluten-free bars you munched on in your home office while working a gazillion hours a day. That’s not really a business expense (though it would be great if it were! Sadly, it’s not.)
Focus on these types of business expenses:
- office supplies – like printer paper, ink cartridges, and sticky notes
- furniture or equipment – like a new desk, laptop or printer
- work travel expenses – like airfare, hotel rooms, Ubers, and food while on the road
- conference fees – like registration fees
- website fees – like website hosting or domain registration
- marketing fees – like Facebook or Instagram ads
- software expenses – like your email marketing software or Dropbox fees
- team member expenses – like your virtual assistant, OBM, or bookkeeper
- mileage – like miles and gas for when you drive to your local Mastermind
For each purchase, create a column on your spreadsheet for the item name (what it is), the vendor (who you purchased it from), the date, and the amount. Feel free to create a column for notes too if you want.
Save ALL of your business receipts. Every last crumpled one.
You need to back up EVERYTHING on your spreadsheet with the written or electronic receipt. Be diligent about it. Put your receipts in a giant manilla folder. Put them in a shoebox. Put them in a big expandable file.
I don’t care where you put them, but keep them together and keep them organized. You can even take a photo on your phone of each receipt and save them on your computer in a folder. Just know you need to keep them for at least three years so stay on top of them and stay organized.
(If you’re reading this and totally sobbing that you haven’t been keeping your receipts all year, grab a tissue and don’t freak out. It’s okay. Just find all the receipts you can. Go back through your e-mail for any electronic receipts for any program, course, Google storage, Facebook ad and paper clip you bought this year. Look on your credit card statements. Find every receipt in every coat pocket you can. Carve out a few hours and do it to SAVE MONEY.
And also make a New Year’s Resolution right this cotton-pickin’ minute that you are going to be WAY more organized in 2017 – and get your spreadsheet and your manilla folder set up pronto so you’re ready to go on January 1st for next year.)
If you want a sample Excel spreadsheet that looks exactly like what I use for my own business expenses, e-mail firstname.lastname@example.org and I’ll send it to you. It’s the same exact one that I’ve used for 5 years – and I record everything myself. #legallove
2. Buy big-ticket items before 11:59pm on New Year’s Eve!
Do you have any big purchases you’ve been thinking about but haven’t made yet? Like for example:
- Need a new computer? (Buy it now.)
- Going to a conference in early 2017? (Purchase plane tickets now.)
- Want to take that evergreen course you’ve been considering? (Enroll now.)
If you have a big purchase to make, do it now (even if you don’t need it for a few months).
Why? Because you can record it as a business expense on your spreadsheet for 2016 and take a tax deduction for it THIS year. (Just know that you can’t take it next year too.)
Buying big items now can equal big tax deductions – but the clock is ticking. You’ve got to do it before you clink champagne glasses, smooch your cutie, and hear Auld Lang’s Syne on NYE!
3. Give to charity!
Ahhh…. This one’s my favorite. As an aside, here’s a fun fact about me (that I don’t talk much about)…After I left the large corporate law firm but before I became a Legal Coach®, I worked for 3 non-profits and colleges where I raised over $5 million in major gifts and helped donors create scholarships for students through their wills. (Yep! Lil Ol’ Me! Crazy, right?) I LOVED serving the world by raising money for health and human services agencies and higher education…. But I digress!
Fortunately, you don’t have to work for a non-profit to give back. You can just GIVE.
Make cash donations or donate goods or services to others in need – and get the benefit of a tax deduction provided you donate to a legally-recognized charity.
If you make a contribution to a 501(c)(3) non-profit organization, you can get tax benefits. (In other countries, check with your accountant to find out the charity requirements.)
You can do this in one of 3 ways:
- You can donate cash – like cash or checks to the non-profit organization but date and mail them before December 31st.
- You can donate clothes / household items – like your old winter coat, Aunt Hilda’s hand-me-down lamp, or your kids’ outgrown toys but you only get a tax deduction for the value of what the items are worth according to the IRS.
Click HERE for a sample guide. (Even though you’ll be bummed that your favorite Banana Republic jacket is valued at $4.00 or whatever – it all adds up. Write down every item you donate and the IRS value. It quickly can add up to be hundreds of dollars.)
- You can donate services – like your marketing, advertising, legal, accounting, medical, or coaching expertise and more! – but check with your accountant about the details around what services you can donate and deduct.
Being generous during the holiday season and throughout the year helps those in need, warms your soul AND pads your pocketbook (the first part being the most important!).
Take a few minutes to think of a charity you’d love to support and write out a quick check or take a few hours and clean out your basement (that’s one on MY list!) and drop off stuff at Goodwill, Salvation Army or your place of worship – and GIVE, GIVE, GIVE this holiday season! You’ll be sure to RECEIVE, RECEIVE, RECEIVE in saving money on your taxes and creating good juju!
Here’s to being a savvy biz owner, helping the world, and lowering your taxes – all at the same time!
No matter how big or small your donation is to a charity, they appreciate it and at least one life will be touched. Whether it’s $5, $50, $500 or $5,000, the amount isn’t important. What matters is that you are making a gift from your heart with love to help others. It adds up. It changes lives. It raises the frequency of the planet. It matters. Just sayin’. THANK YOU in advance for making a gift of any amount to any organization to benefit others in need. #grateful #holidaylove #youmatter
I think it is important to keep taxes in mind year round so that you can be prepared for when tax time does come. Saving receipts, keeping detailed notes and being organized will make the process go smoother. Great tips, thanks for sharing!
Thanks Lisa for sharing these great tips that can lower your taxes. I’m making itemized deductions and I always look for tax breaks that can help me maximize my tax savings. There are actually tax breaks that are overlooked by taxpayers like medical deductions. Did you know that you can avail of a tax deduction if you’re taking care of your aging parent?
You can use this tax break if you can prove that your aging parent is dependent on you and if you are paying for at least half of his or her expenses. Another tax break is available for policyholders of qualified long term care insurance. But the deductions are based on the taxpayer’s age at the end of the tax year. If you’re 40 and below, you can avail of $390 tax deduction and those who are older than 40 but below 50 can avail of $730 tax deduction.
I hope this information can help those who are doing their taxes.
Samantha recently posted…Long Term Care Tax Deductions
Thanks, Samantha, for sharing these great tax tips for those caring for aging parents. So helpful!