It’s Time for
Year-End Tax Planning
It’s never too early to examine and review your current tax
planning strategies. Starting to plan and implement tax saving strategies
now can help your practice and you benefit at tax filing time next year.
Time Year-End Payments
If your practice uses the cash method of accounting, it may be a good idea
to review the timing of year-end payments so you can more effectively
coordinate their tax impact. For example, you can increase your 2009
deductions by paying expenses in December instead of January.
Expenses paid by credit card in 2009 are deductible in 2009 even if you
don’t pay the bill until 2010. The same holds true for an expense paid by
check in 2009, since the amount is generally deductible in 2009 even when
the check is not negotiated until 2010.
Buy Medical Equipment and Software
If you have thought about buying new medical or office equipment for your
practice or have considered upgrading your office’s software system, now may
be a good time to take the plunge. This year’s stimulus act (The American
Recovery and Reinvestment Act of 2009) contains several provisions that make
it more cost-effective for businesses to buy business assets now rather than
later.
For example, the Section 179 expensing election allows you to take an
immediate deduction for the cost of most kinds of depreciable assets in the
year they are acquired and placed in service (within tax law limits) instead
of claiming depreciation deductions over a multi-year period. Under the
stimulus act, the dollar limit on asset purchases eligible for Section 179
expensing is $250,000 for the 2009 tax year, extending the same limit that
applied for 2008. The $250,000 deduction maximum is reduced to the extent
the cost of qualifying property placed in service during the taxable year is
greater than $800,000.
In addition, a provision in the tax code allowing a first-year depreciation
“bonus” equal to 50% of the cost (technically, the “adjusted basis”) of
qualified new business assets has been extended by the stimulus act for a
year, generally for property placed in service through 2009. In addition to
equipment, bonus depreciation is available for furniture, most computer
software and other qualified property. Bonus depreciation can be claimed in
addition to the regular first-year depreciation deduction and may be used in
conjunction with Section 179 expensing.
Personal Tax Planning
There are several areas where some advance planning can help with your
personal 2009 tax liability. For example, plan to contribute the maximum
amount allowed for this year to your tax-deductible retirement plan. Look
into selling appreciated investments that you have owned for more than one
year to take advantage of the currently favorable long-term capital gains
rates. In addition, consider disposing of losing investments since capital
losses are fully deductible against capital gains and up to $3,000 of
ordinary income per year.
The IRS is offering taxpayers a brief window of opportunity to buy a
qualified vehicle this year and obtain a special tax break. If you buy a new
car, light truck, motor home or motorcycle after February 16, 2009, and
before January 1, 2010, you may qualify to deduct state and local sales or
excise taxes paid on up to $49,500 of the purchase price. If you are a
resident of a state without sales tax, you may still be able to deduct other
fees or taxes imposed by the state or local government. The fees or taxes
that qualify must be assessed on the purchase of the vehicle and must be
based on the vehicle’s sales price or assessed as a per unit fee.
The amount of the deduction is phased out for those whose modified gross
income is between $125,000 and $135,000 for individual filers and between
$250,000 and $260,000 for those who file joint returns.
Our firm can identify other potential tax-reducing opportunities that you
may be unaware of. Please
contact us for planning
assistance.
Health Care Commentaries is
provided by Somerset’s
Health Care Team
for our clients and other interested persons upon request. Since
technical information is presented in generalized fashion, no final
conclusion on these topics should be made without further review. For
additional information on the issues discussed, please contact a member
of our Health Care Team. This
document is not intended or written to be used, and cannot be used, for
the purpose of avoiding tax penalties that may be imposed on the
taxpayer.
Somerset CPAs,
P.C.
3925 River Crossing Parkway, Third Floor
Indianapolis, Indiana 46240
317.472.2200 • 800.469.7206 • FAX 317.208.1200
www.SomersetHealthCareTeam.com
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