Never Too Early for IRS Tax Saving Strategies!

Another April 15 came and went, leaving many of us poorer and grumbling about government spending. For business owners and the CFOs and controllers, reducing tax liabilities to states and the IRS is a year-round effort.

Small business owner and tax guru Gene Marks shared a few of his “win-win” strategies on WFMZ 69 News. By win-win, we’re talking about moves that can put more money in the pockets of employees and will save your business money or won’t hurt it tax-wise.

IRS Rewards Paying More to Health Insurance

Some employees realize that health insurance benefits provided by their employers count as income. Companies could theoretically pay their people more if federal laws didn’t require them to pay toward health plans. Benefits and HR professionals need to communicate to employees what those plans provide for and periodically remind them of how their companies are contributing.

Along those same lines, businesses can reap savings by paying more toward employees’ health plans in leiu of salary increases. Reason: “When you give someone a straight raise, both you and the employee will pay taxes on that amount,” says Marks. “But most health-care contributions are non-taxable and deductible.”

Invest In Equipment & Materials Before the Ball Drops

In the old days a business owner could recoup 100% of business-related equipment expenses the following year. Accountants would remind clients to buy new machinery, technology, office furniture, you name it, before New Year’s Eve rolled around. The IRS later reduced the deduction to 80% and eventually the current limit of 60% — not as great certainly, but not bad.

Caveat: The IRS requires that new equipment be put into service the year it’s purchased to take advantage of the 60% write-off the following year. The remainder of purchases of “certain machinery, equipment, office furniture, software, hardware, and other assets” can be depreciated in succeeding years.

Paying Employees On Leave? Take the Credit

Let’s say an employee needs to take up to 12 weeks of family leave. He or she doesn’t have enough sick and/or vacation time to cover the whole period. Your company opts to pay the employee during the leave, even if it’s just 50% of normal salary.

Make sure to take advantage of the employer credit for paid family and medical leave. “The credit is a percentage of the amount of wages paid to a qualifying employee while on family and medical leave for up to 12 weeks per taxable year,” according to the IRS website.

“The minimum percentage is 12.5% and is increased by 0.25% for each percentage point by which the amount paid to a qualifying employee exceeds 50% of the employee’s wages, with a maximum of 25%.” The current cap is $72,000 in total income paid during a calendar year.