This week signals the end of 2015 and start to a new year. For business owners, and individuals alike, this time of year is often dominated by planning and making resolutions for the upcoming year. While taxes and tax planning may not even be on your radar, it’s important to consider and plan for certain tax-related matters today. Doing so can prove to be beneficial come April as well as for months or years to come.
When it comes to dealing with the Internal Revenue Service, a defense of ignorance doesn't go very far and failing to become informed about tax issues that are relevant to you or your business can come at a significant cost. For example, for the 2015 tax year, taxpayers who fail to purchase health insurance either through an employer or via the affordable care act will face a tax penalty of two percent of their household income or up to $975. Additionally, penalties are expected to continue to increase every year which is engineered to incent previously non-compliant taxpayers to purchase health insurance.
For business owners, there are still a few days to purchase business-related equipment and to take advantage of any related tax deductions. For the 2015 tax year, the cap on business deductions is $500,000. For a business owner, it's important to plan whether to take these deductions in the current or a future tax year. Being strategic and planning when to take these deductions is important as a business owner may be able to offset the higher amount of taxes that are imposed during more profitable years.
As with many things in life that revolve around money and finances, business owners and individuals are advised to research the tax implications related to certain decisions. Failing to do so can result in unexpected fines and penalties.
Source: Green County Daily World, "2015 Year-End Tax Planning Traps and Opportunities," Jeff R. Hawkins and Jennifer J. Hawkins, Dec. 28, 2015