It's that time of year to consider year-end tax planning

Happy Halloween! It’s getting close to year-end which is scary. This is a friendly reminder to consider consulting your tax advisor to plan for year-end tax liabilities. In the next few months tax advisors will begin preparing 2019 client tax liability projections. Your income may have changed since you last spoke to your advisor back during tax season. If your income significantly increased it would be wise to have your estimates adjusted for the final estimate payment due in January so that you’re not hit with an amount you didn’t expect to pay when you file in April.

A few real estate items to consider is whether you have recently sold or are considering a sale of property. You’ll likely want to know if the sale qualifies as a capital or ordinary gain. You may want to discuss a 1031 exchange to defer a possible gain if you are wanting to sale a property.

Also, is it worth considering a cost segregation of a recent property purchase you made? A cost segregation can help to accelerate depreciation expense by identifying assets grouped in a larger asset class and breaking them into parts that can be depreciated over a smaller amount of time. In some cases, the assets identified are eligible for bonus depreciation. The thing to remember is this will help reduce your tax liability if the cost segregation is performed.

This is a good time to consider updating your vendor list with current information as well. 1099 forms are due to the recipient by January 31st and business owners are often scrambling to get vendor information to complete the 1099’s in January.

Have you looked at your asset depreciation schedule recently? It’s good to review it with your tax advisor annually if you have multiple pages of depreciable assets. You may find that you no longer have some of those assets and they need to be properly disposed so that you don’t wind up paying tangible property taxes on an asset you no longer have.

Tax projections are helpful in deciding if you are timely paid on estimates throughout the year. You may feel at ease with the projection and decide to hold off on making a tax payment. Either way it’s always a good idea to having that conversation with your tax advisor.