5 Ways to Make Your Tax Life Easier in the New Year

Tired of always stressing when tax time rolls around? Here are a few things you can do right now to help make next year’s tax time just a little easier for yourself.

Zach Olson is the Founder & CEO of TaxAlli.com. At Tax Alli, we pair you with real life accountants and use cloud software to make small business accounting awesome. So you can do what you love while we handle the rest.

Tired of always stressing when tax time rolls around? There are myriad ways you can reduce the amount you owe in taxes next April, including deductions and other means. However, if you don’t know what they are, they can’t help you!

Here are a few things you can do right now to help make next year’s tax time just a little easier for yourself.

1. Business Related Education

This is the perfect example of a deduction that works double for your business. The language of business changes all the time, and you can never stop learning. If you do, you run the risk of falling behind your competitors and losing customers.

Whether you buy books or attend seminars all over the country, there are plenty of opportunities for you to grow your brain and your company. If you go ahead and pay for this education in 2014, these expenses can also be used as a tax deduction on your upcoming taxes.

2. Buy Now, Tax Later

Do you have a bunch of office related expenses coming up? If you wait until the New Year, you won’t be able to take deductions on them until 2016. If you buy them now, you can use them come tax time, meaning you get a much bigger break.

So take a good look around your office and see what you can upgrade. Computers, furniture, even pens – all of it can lead to a nice healthy break when the taxman comes calling soon.

3. Contribute to Charity

Another deduction that can also do wonders for your business is contributing to charity. One great example is taking all your old furniture and office supplies and giving them to a place like Goodwill rather than selling them off. All you have to do is make sure to get a receipt.

This could potentially give you a bigger money boost than selling them outright. Also, charitable donations always look good for a business. It means you care about the community you operate within. And charitable giving just makes you feel good! 

4. Add More to Your QETs

Quarterly estimated taxes, or QETs, are a huge pain for every business owner. So why would you want to add more to them? Simple: the more you pay now, the less you have to ultimately worry about later on.

While the “Safe Harbor Rule” allows businesses to only pay the same amount they owed the previous year, this doesn’t mean you have to stick to this. You could potentially pay a bunch more each quarter of the year so you don’t end up owing a large bill come the big tax day in April.

5. Defer Income

Your natural inclination as a business owner is to take in as much money as you can. However, this might not be the best thing for your business, believe it or not. Deferring payment from your clients until next year could actually help you out.

For example, let’s say you finished a job for a client that’s due December 31st. If they pay on that day, you owe taxes for the job in 2015. If you defer payment until January 1st, though, you wouldn’t owe taxes until 2016, meaning your 2015 taxes are that much simpler!

These are just a few suggestions, and your particular case might be very different. State tax laws, for instance, might totally change everything, so it’s best to always consult with your nearest tax professional if you have questions.

What happens if you can’t pay your taxes?

Owing the IRS money can be downright scary, but don’t panic. Here’s what to do if you can’t pay your taxes.

You’ve been a good little small business owner all year long, keeping track of each and every write-off. You’ve scanned your receipts, organized your accounts, and sent everything to your tax professional in plenty of time for the April 15 deadline.

You’re not expecting a refund this year, but you don’t expect to owe money either. You’ll most likely break even, or maybe owe a small amount, if anything.

Then you hear back from your accountant.

Not only do you owe money, you owe a lot of money. Money you simply don’t have. So what happens if you can’t pay your taxes?

First thing’s first: take a deep breath. Owing money to the IRS can be stressful, and even downright scary! If you owe money you weren’t expecting to owe, or if you owe money you simply don’t have, it can seem like cause for a major freak out.

Don’t worry, and don’t beat yourself up for any accounting mistakes that may have brought you to this point.

Whether you screwed up, your assistant screwed up, or your tax professional made a blunder, you can worry about assigning blame later. Right now, you have to take swift action to deal with the tax money you owe.

Can’t I just file for an extension?

Certainly. You can always file for an extension, and you can always revise a tax return that has already been submitted (within the last three years, that is).

But you still have to pay.

That’s right – even if you won’t be submitting your actual return until July, you still have to pay monies owed the IRS by April 15. If there is a mistake as to how much you owe, or your completed return changes the amount you owe, the IRS would rather refund the difference later than miss out on money now.

But what if I simply don’t have the cash?

If you weren’t expecting to have to pay taxes this year, suddenly finding out you owe thousands of dollars can be panic-inducing. Many small business owners simply do not have a ton of extra money lying around.

It may also not be possible for you to increase credit limits, take out a loan, or borrow money from friends or family in order to pay your tax bill.

If you owe taxes but simply don’t have the cash, it’s important that you…

Pay what you can

It’s ok if you don’t have the full amount. It’s even ok if you don’t have anything close to the full amount. But you still need to pay as much as you can by April 15th.

Let’s say you owe the IRS $2,500, but that you simply can’t afford to shell out $2,500 all at once.

Send the IRS a check for as much of that amount as you can afford to pay. You might pay $500, or even $200, but send them something.

This demonstrates that you’ve attempted to pay on time, and will benefit you as you work with the IRS to get your tax bill paid.

Next steps

Depending on your situation, you may be able to set up a payment plan to pay off your tax debt over time. Keep in mind that you may very well incur fees for not paying on time, and these will be added to the amount you already owe.

As long as you communicate openly with the IRS, failing to make a full tax payment is not the end of the world. If you don’t have the money, you don’t have the money. Where you’ll get into trouble is in failing to communicate and running and hiding when you can’t pay your bill.

Even if you’re so broke you can only send the IRS $5, do it. Send something, send it on time, then take action to set up a payment plan and clear your tax debt as soon as possible.

What would you do if you couldn’t pay your taxes? Have you ever been in this situation? What did you do?

Tough Tax Time in 2013? Make it Easy in 2014

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Tax time has almost come and gone, so hopefully you’re at the end of your journey or at least approaching the signpost. If not, you may need to hurry and file for a tax extension, lest you encounter bigger problems down the line. Even if you do manage to complete your taxes on time, though, the early-April slog can signal a larger issue at hand. Continue reading “Tough Tax Time in 2013? Make it Easy in 2014”