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7 opportunities for last-minute filers

by on
in Small Business Tax,Small Business Tax Deduction Strategies

For some people, waiting until mid-April to file their individual income tax returns simply represents a bad case of procrastination. Others hold out so they can keep their money until the last possible moment. Whatever your reason, if you haven't filed yet, you can still cut your 2004 tax bill with a few timely tactics and tax-smart choices. Here's a quick sampler of seven ideas:

1. Contribute to an IRA if you qualify for tax deductions (e.g., if you're not actively participating in a qualified retirement plan). Similarly, if you're self-employed, chop down your adjusted gross income (AGI) by contributing to a SEP, SIMPLE or Keogh plan by April 15.

2. Elect Section 179 expensing deductions for new or used business equipment that you placed in service in 2004. As a bonus, take the "bonus" depreciation deduction for qualified new business assets.

3. Choose to deduct state sales taxes you paid in 2004, rather than the state income taxes you paid, if that produces
a bigger deduction. Because you likely didn't track your sales taxes in 2004, the IRS published state-by-state tables that let you estimate your sales-tax spending. Tack on sales tax for "big-ticket items" to the prescribed amount for your state.

4. Offset 2004 interest on a taxable bond by deducting the amortized premium on Schedule B.

5. Elect out of installment-sale reporting if you have losses to offset investment property installment sales.

6. Claim nonbusiness bad debts as capital losses on Schedule D. You can do that if the debts are totally worthless. Keep records of your debt-collection efforts.

7. Bypass favorable tax treatment on long-term capital gains and dividends if the subsequent increase in investment interest deductions provides a greater tax-saving benefit.

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