Year End Tax Planning

Filed in archive Financial on December 7, 2006

Over at smart money is a great guide on things you can do to reduce your taxes.

A little advance planning will almost always help you reduce the taxes you owe. Via Smart Money

For example if you have a hobby business you might have an option to claim a tax loss.

This includes things like breeding animals or restoring and selling antique cars, from which you have some revenue but perhaps not enough to be profitable every year. The tax rules allow you to say an activity is a for-profit business as long as it runs in the black at least three out of every five years (two out of seven for horse racing, breeding, showing or training). The beauty of this rule is that if you can turn your hobby into a business, at least for tax purposes, you can deduct losses in years when expenses exceed revenue. For hobbies that don't qualify, by contrast, you can use expenses only to offset income, but you can't deduct overall losses. Via Smart Money

Over a small business information their list of five year-end tax tips includes a very important one, update your accounting.

By paying attention to your sales, expenses, and profits now you have an opportunity to put the odds in your favor and save some cash. Just a little time getting organized could save you a lot of money.

Better off when it is in your pocket right?