There’s never a bad time to review your current tax situation. But year-end can be an especially good time to plan and implement tax-saving strategies.
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 that you can more effectively coordinate their tax impact. For example, you can increase your 2014 deductions by paying certain expenses in December instead of January.
Expenses paid by credit card in 2014 are deductible in 2014 even if you don’t pay the bill until 2015. The same holds true for an expense paid by check in 2014, since the amount is generally deductible in 2014 even if the check does not clear the bank until 2015.
Buy Medical Equipment
If you have thought about buying new medical or office equipment for your practice, now may be a good time to take the plunge. 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 multiyear period. The dollar limit on asset purchases eligible for Section 179 expensing is $25,000 for the 2014 tax year. The $25,000 deduction maximum is reduced dollar for dollar to the extent that the cost of qualifying property placed in service during the taxable year is greater than $200,000.
Identify Credit-eligible Expenses
As opposed to a tax deduction, which lowers taxable income, a tax credit directly offsets tax liability. Two credits that may be of interest:
A disabled access credit for expenses paid or incurred to modify or acquire equipment or devices for disabled individuals, or to improve an older building to make it accessible to the disabled
An energy credit for the installation of solar or certain other energy-efficient property in your medical office building.
Various limitations and requirements apply.
Copyright 2014 by DST. All rights reserved. The general information in this publication is not intended to be nor should it be treated as tax, legal, or accounting advice. Additional issues could exist that would affect the tax treatment of a specific transaction and, therefore, taxpayers should seek advice from an independent tax advisor based on their particular circumstances before acting on any information presented. This information is not intended to be nor can it be used by any taxpayer for the purpose of avoiding tax penalties.
McPhillips, Roberts and Deans, PLC Trusted business advisors for over 40 years providing accounting, tax and consulting services. http://www.mrdcpa.com/Industries/Healthcare