- Section 179 expensing is capped at $25,000 in 2015, but it can still be a significant deduction for qualified purchases when compared to the ordinary deductions available for equipment purchases.
- Use the “de minimis safe harbor election” for expensing items which aren’t required to be capitalized. Units of property up to $2,500 each can be expensed with this election and the allowable deduction is even larger for businesses which have certified audited financial statements.
- Set up a self-employed retirement plan if you’re self-employed and haven’t done so yet. Additionally, consider establishing a retirement plan for your business. Employer contributions to qualified plans are deductible.
- Accelerate deductions into the current year. If you’re a cash-basis taxpayer, consider making an estimated state tax payment before Dec. 31 so you can deduct it this year rather than next. Both cash and accrual base taxpayers can charge expenses on a credit card and deduct them in the year charged, regardless of when paid. Warning: If it’s likely you’ll be in a higher tax bracket next year, the opposite strategy (accelerating income and deferring deductions) may save you more.
- Increase your basis in a partnership or S corporation if doing so will enable you to deduct a loss from it for this year.
- Defer income to next year. Using the cash method of accounting? You can defer billing for your products or services. Using the accrual method? You can delay shipping products or delivering services.
- Accrual method businesses should consider accruing year-end bonuses to employees who aren’t controlling shareholders. Even though they’re paid in the following year, they’re deductible in the current year and the bonus won’t be taxable to the employee until next year.