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Accounting Business Tax

Year End Tax Saving Ideas For Individuals – Make Charitable Contributions

Make Charitable Contributions

You can donate property as well as money to a charity. You can generally take a deduction for the fair market value of the property; however, for certain property, the deduction is limited to your cost basis. While you can also donate your services to charity, you may not deduct the value of these services. You may also be able to deduct charity-related travel expenses and some out-of-pocket expenses however.

Keep in mind that a written record of charitable contribution is required in order to qualify for a deduction. A donor may not claim a deduction for any contribution of cash, a check or other monetary gift unless the donor maintains a record of the contribution in the form of either a bank record (such as a cancelled check) or written communication from the charity (such as a receipt or a letter) showing the name of the charity, the date of the contribution, and the amount of the contribution.

Tip: Contributions of appreciated property (i.e. stock) provide an additional benefit because you avoid paying capital gains on any profit.

Accounting Business Financial Planning Tax

Year End Tax Saving Ideas For Individuals – Deferred Income

There are a number of steps you might take by year-end to cut your 2011 tax bill, such as deferring income, accelerating deductions and capital gains planning.

Deferring Income

  • If you are planning on selling an investment this year on which you have a gain, it may be best to wait until the following tax year to defer payment of the taxes for another year (subject to estimated tax requirements).
  • If you are expecting a bonus at year-end, you may be able to defer receipt of these funds until January. This allows you to defer tax payments (other than the portion normally withheld) until the following year. However, keep in mind that you usually defer taxes on a bonus that is contractually due in 2011.
  • If your company grants stock options, it may be wise to wait until next year to exercise the option or sell stock acquired by exercise of an option. Exercise of the option is often but not always a taxable event; sale of the stock is almost always a taxable event.
  • If you’re self employed, and can afford the delay in cash inflow, defer sending invoices or bills to clients or customers until the end of December.

Caution: Keep an eye on the estimated tax requirements.

Accounting Quickbooks

Tracking Bills in QuickBooks, Worth the Effort

Next to payroll, paying bills is probably your least favorite task in QuickBooks. You don’t have to use this feature — you can keep stacking bills on your desk, scrawling the due dates on a paper calendar, and writing checks.

If you’re still operating this way, though, you’re missing out on the numerous tools that QuickBooks offers to track your accounts payable, including the ability to:

  • Enter bills as they come in
  • Set reminders for bills due
  • Pay bills easily
  • Locate a bill or payment quickly
  • Enter bills as (or after) you receive items
  • Link bills to purchase orders
  • Have instant access to a bill’s status

Receiving the goods

When an expense bill comes in (from a utility company, for example), click the Enter Bills icon on the home page, or Vendors | Enter Bills. A window like the one displayed above opens. Select the vendor and fill in the blanks. Make sure that the Expenses tab below is selected and the appropriate account number and amount fields are completed. If it’s a bill for an item that already has a related Item Receipt (the shipment preceded the bill), QuickBooks instructs you to use Vendor | Enter Bill for Received Items. Follow the prompts. Note: Dealing with incoming inventory is complex. Consult with us if you plan to use this feature. If the bill came simultaneously with items, click Vendors | Receive Items and Enter Bill. When you select the vendor from the list, this box opens (if you have sent a purchase order):


Figure 2: QuickBooks is telling you that you have open orders with this vendor.

Click Yes. The Open Purchase Orders box opens, containing a list of open POs. Select the one(s) you want and click OK. The bill form opens, containing the details of that purchase order. Change quantities if they don’t match the shipment, and edit other fields as necessary. Save the bill.

Settling your debts

It’s good to set reminders for bills. Go to Edit | Preferences and click Reminders. Make sure that the Show Reminders List…box is checked, then click Company Preferences. Find the Bills to Pay row and enter the advance notice you’d like. Indicate whether you want to see a list or a summary, then click OK. When bills are due, click the Pay Bills icon or select Vendors | Pay Bills. A window opens displaying all outstanding bills. You can pare this down by selecting a date in the Due on or before field and filtering by vendors. The screen will look something like this:


Figure 3: You can easily select the bills you want to pay.

Enter a check mark next to the bills you’re paying, and change the amount in the Amt. To Pay field at the end of the row if necessary. At the bottom of the screen, you can set the payment date and type, use any discounts or credits, and make sure the correct payment account is selected. When you’re done, click Pay Selected Bills. Tip: You can have credits and discounts automatically applied by going to Edit | Preferences | Bills

.

After You’ve Paid Up

There are a number of places where your bills appear in QuickBooks, including:

  • The Unpaid Bills Detail report
  • The A/P Aging Detail report
  • The Vendor Center
  • QuickReports
  • In the Recent Transactions pane of some forms
  • On the bills themselves


Figure 4: QuickBooks displays the Paid status of bills.

QuickBooks also lets you void and delete bills, and copy and memorize them. Check with us before voiding and deleting, as this can make some complicated changes in your accounts.

You can just pay bills by using Banking | Write Checks or Enter Credit Card Charges. But the payoff for tracking bills is instant access to your accounts payable status, better relations with vendors, and a more insightful accounting of your company’s cash flow.

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