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Tax Ideas Before Year-End

Consider a College Graduation Gift – If your child graduated from college this year, and you provided more than half of his or her support you can generally claim a $3,950 dependency exemption even if they already landed a job.  Tip:  If you’re extra generous with your graduation gift, it could push you over the half-support mark.

Pay Your Estimated Tax – If you are filing as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.  Corporations generally have to make estimated tax payments for the corporation if it expects to owe tax of $500 or more when they file their return.Note:  The third quarter due date is September 15, 2014

Step-up Your 401k Contributions – You can elect to defer up to $17,500 in salary to your 401k for 2014 ($23,000 if you’re 50 years or older).  Tip:  If you clear the $117,000 Social Security wage ceiling, you can use all or part of the payroll savings to help fund your 401k

Rent Out Your Vacation Home – If you lease your vacation home, you can write off certain rental activity costs, including depreciation.  However, if your personal use exceeds the greater of 14 days or 10% of the days you rent out the home, the IRS limits deductions to the amount of rental income.

Entertain Business Clients – When you have a business discussion/meeting with a client you can generally write off 50% of entertainment costs preceding or following the meeting – including a round of golf, a sporting event or a night on the town.

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