Learn more about how to save on taxes through these tax planning strategies.
Chad Chandler: There are many strategies around taking itemized versus standard deductions. Can you give us an example of one?
Kristina Knowles: Absolutely. One tax planning strategy is to double up on your itemized deductions every other year. This is a good strategy because each year you are allowed to take the larger of the standard deduction or itemized deductions. Itemized deductions include things like mortgage interest, charitable contributions, and property taxes. Currently, the standard deduction is $12,600 for married, filing-jointly taxpayers.
Chad Chandler: Business owners have a different set of circumstances. Can you provide us a tip for them?
Kristina Knowles: Absolutely. If you own a business which is operating at a net income and you're contemplating purchasing new business equipment, you could accelerate the purchases into the current year and take advantage of Section 179 accelerated depreciation.
The Section 179 deduction allows you to deduct 100% of the purchase price of the equipment in the current year rather than depreciating it over its useful life.
Chad Chandler: Are there any tax strategies for people who own investment real estate?
Kristina Knowles: Yes, there are a handful. If you are considering purchasing real estate to rent, it's important to know that rentals are considered passive activities, and any losses are generally only deductible if you also have passive income. Now, you don't lose those losses that have been disallowed, but rather they carry forward until you either have passive income or you dispose of the property.
If you already own a rental property that has been generating losses in the past that are carrying forward, and if you're considering selling it, all of those losses that have been carrying forward are deductible in the year of sale. This would reduce your taxable income and tax.
Chad Chandler: These are just a few of the tax-saving strategies available to you. At Chandler & Knowles CPAs, we provide comprehensive tax and financial planning. Contact us to learn more about how you can benefit from these services.
Contact a Tax Professional Today
To learn more about the tax planning services at Chandler & Knowles CPAs, contact us today at (817) 369-3874 or fill out our contact form to schedule your appointment at one of our offices in Flower Mound or Addison, TX. Not from the area? We are still happy to assist you over the phone or through email.