An easy one – Healthcare:
You can claim a 100% deduction for health insurance premiums. This is an expensive item and one that many people forget to take if they do not use a CPA to prepare their tax return. This deduction does not go on schedule C as it must be deducted on page one of form 1040.
And if you don’t have health insurance because you thought it would be too expensive you may be surprised to find you can be penalized. The Affordable Care Act (ACA) requires every individual, with some exceptions, to have qualifying health insurance coverage in 2014 or owe an “individual responsibility payment”. The penalty could be as much as $285.
Fixed Asset Purchases:
If you make a capital purchase for your business you normally would depreciate it. That is you must deduct it incrementally over the life of the asset. Small business owners are allowed to write off some of their equipment in the year they purchase it if they qualify for Section 179 Expenses. The limit for this year is $25,000 (as of the writing of this article, Congress may increase it).
So take the time to evaluate what your profit will be this year and what your business needs are. New equipment that is needed may be purchased and expensed in the year purchased.
Self-Employed Auto Deduction:
If you are using your car in your business and do not itemize your expenses, the Standard Mileage Rate for 2013 is 56 cents per mile. This is the mileage rate for the cost of operating your car, van, pickup, or work vehicle.
Self-Employed Retirement Plans:
You should keep retirement planning in mind. You can set up a SEP-IRA by the end of the year and make a contribution. This is a Simplified Employee Pension Plan for yourself and if you have employees, you will need to include them as well. The great thing is you can contribute up to 25% of your income with a limit of $52,000 for 2014. The business makes the contributions and gets a deduction (for you and your employees).
If that sounds too difficult you can also set up an IRA to shelter some of your profit this year. Limits are $5,500 for 2013 with a catch up provision of $1000 if you are over 50 years old. Fortunately you will have until April 15th of the following year to make an IRA contribution.