BarbaraWeltman 4 Tax Actions to Take in July – Millennium Magazine Columbia SC News

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Published on July 20th, 2015 | by Millennium Magazine Staff


4 Tax Actions to Take in July

By BarbaraWeltman, Guest Blogger

Like most small business owners who don’t think of July as an important tax time, you may not be thinking about taxes right now, but you should be. Here are four things to do now to help achieve a good tax outcome for the year.

  1. Review the first half of the year

If Shakespeare was right when he said, “what’s past is prologue,” then your business income and expenses for the first half of the year can provide guidance to you on what to expect for the rest of the year. This will enable you to make accurate estimated tax payments to cover your tax bill for 2015 that are still owed for the year (the third installment is made September 15, 2015, and the fourth by January 15, 2016). Doing this will help you avoid penalties for underpaying, ensure you have the cash to make your payments, and enable you to reduce payments where possible.

Review your income and expenses through the first two quarters of the year. Ask yourself:

  • Are my estimated taxes sufficient to meet my projected tax bill? You may be paying enough to avoid penalties but may need to save for a lump-sum payment when you file your return
  • Do I need to increase estimated taxes in the last two payments? This helps you avoid estimated tax penalties for underpayments
  • Should I reduce estimated taxes for the last two payments? This action may be advisable if your income fell short of what you expected it to be (so you won’t overpay your taxes and have to wait until you file your return to recover your overpayment)
  1. Revise policies for same-sex couples

In June, the U.S. Supreme Court ruled ( that every state must recognize same sex marriages. This change impacts same-sex couples living in states with income states that previously failed to recognize their marital status.

It also affects businesses in states that previously did not recognize same-sex married couples. Employers should revise state income tax withholding for affected employees. Review any other employee benefit changes that are needed in light of the Court’s decision.

  1. File 5500 forms

If you have a qualified retirement plan, such as a 401(k) plan, you may need to file an annual information return with the Department of Labor using an IRS form (usually Form 5500 or 5500SF) for this purpose. The return for a calendar-year plan for 2014 is due July 31, 2015.

Whether your business is incorporated or unincorporated, if your plan covers only you, your spouse, and partners – and does not provide any benefits to other employees – you can file a simplified form (Form 5500-EZ). This form is not required if the plan’s assets at the end of the year are no more than $250,000. However, regardless of the amount of assets, you must file a form for the final year of the plan. Find more information in the instructions to Form 5500-EZ (

Note: No filing is required for SEPs and SIMPLE-IRAs, regardless of the amount of plan assets.

  1. Meet with your tax advisor

Summertime is usually a great time to schedule an appointment with your tax advisor. Take this opportunity when your business may be slow and when your advisor is readily available to go over your tax picture. Learn from your advisor what tax planning moves you should make to lower your tax bill for the year. The sooner you do this, the more time you have to implement these moves. Actions to cut your taxes include:

  • Adjusting deductible compensation. You may want to increase wages—for cost of living adjustments, in anticipation of increases in the minimum wage, or for any other reason—if your business can afford to do so
  • Buying or leasing equipment. While the rules on writing off the cost of equipment purchases in 2015 are still uncertain (rules that expired at the end of 2014 have yet to be extended for this year), at a minimum, a first-year expensing deduction up to $25,000 (the amount that will apply if there’s no extension of last year’s $500,000 limit) will apply. This dollar limit is certainly sufficient to cover the cost of mobile devices and other technology equipment for you and your employees
  • Adopting a qualified retirement plan. Company contributions for employees are deductible up to set limits
  • Obtaining health coverage for staff (even though you’re not subject to the employer mandate for large employers). This could generate a tax credit

Note: If you take these actions, they can reduce your estimated tax payments, as discussed earlier.

Final thought

The more attention you pay to your taxes now, the more likely you’ll be able to save taxes for the year as well as avoid penalties.




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