Starting a retirement plan, paying bonuses early could lead to tax breaks

It is hard to believe that the year is almost over.

• You may be starting to think about some ways to cut your tax bill before the year ends. You wonder, “Are there some things I can do to reduce my tax bill?”
• There are a few tax breaks you can take that will benefit your employees as well as giving you a break on your taxes.

Setting up a retirement program

The majority of people will agree that saving for retirement is something that they should do, but not everyone takes the time to do so.

• If you set up a retirement plan for your employees, you will be eligible for a credit for setting up a retirement plan, as well as helping them plan for their future.
• This credit will be for 50 percent of the amount you spent to set up or maintain a new qualified plan. The maximum amount you can claim in the first three years the plan is in effect is $500.
• You will qualify for this credit if you have 100 or fewer employees, and have not maintained a qualified retirement plan in the three years immediately preceding the first year this plan put into effect.

Paying bonuses early

Do you want to reward your employees? If you give them a bonus, you can.

• Even though you get a deduction for this year, you don’t have to make the payment by December 31.
• As long as you pay the bonus within two and one-half months of the end of your tax year, you can still take a deduction for it.

Making your facilities handicap accessible

Do you have employees who are handicapped?

• You may be able to claim a tax credit of 50% of the costs to make your facility handicapped accessible if you spend more than $250, but not more than $10,250.
• This would be for not only the removal of physical barriers, but also for costs related to interpreters and devices for the deaf and blind.

If you want some more ideas on how to save money on taxes, give Peden Accounting Services a call to set up an appointment to see how to reduce your tax bill.

Chris Peden, CPA, CMA, CFM, is the Chief Advisor at Peden Accounting Services in Manassas. He specializes in helping people and businesses not only meet their tax filing obligations but also develop plans to save money on taxes, as well as helping businesses understand their financial information and take action to grow their business.