Barbara Weltman over at AOL Small Business shows you how to squeeze some extra savings out of your 2010 tax bill.
1. Wait to bill for work you’re doing now.
Instead of sending an invoice immediately so you’ll receive payment in 2010, consider waiting until the end of the year to send it. This will ensure that payment is received in 2011, and taxes on the income are deferred for another year.
2. Stock up on supplies.
How much paper, toner and other office supplies do you expect to use in 2011? Order it now so the cost is deductible in 2010.
3. Prepay next year’s medical insurance premiums.
If you’re self-employed, your premiums are deductible as an above-the-line deduction on your Form 1040, rather than as a business expense. However, there’s a special break for 2010 only: The premiums reduce your net earnings from self-employment for purposes of self-employment taxes (which covers the employee and employer share of FICA), saving you up to 15.3 percent of the cost of the premiums.
4. Buy needed equipment.
Need a new printer? Want an iPad? Shopping for off-the-shelf software? If you buy the equipment and start to use it in your business before the end of the year, you can claim a full-write off.
5. Pay your outstanding bills.
You may have bills piled up that are not due until 2011. If you pay them now, you can deduct the expenses in 2010. Don’t have the funds in your bank account at the moment? Consider putting the expenses on your business credit card if the vendor or other party allows it. Costs charged to a MasterCard, Visa or other major credit card before the end of the year are deductible this year even though the credit card bill isn’t due until 2011.
Photo by justabouttaxes.