Last-Minute Tax Deductions and Credits for Business Owners

4 Minute Read
Posted by Randy Eickhoff on Jul 2, 2015 8:25:49 AM


You’re a busy local business owner, you spend your days navigating through a variety of different jobs from salesperson to bookkeeper and maybe even the janitor if the duty calls. With all your responsibilities, doing your taxes might end up becoming one of those last-minute things you get to just before tax day rolls around. Trust us, you aren’t alone, lots of small businesses are still able to leverage some profitable tax incentives even if it’s crunch time.

So, what are some of the best last-minute tax deductions you can take advantage of right up until that ticking tax deadline? Take note:

IRA Contribution

Utilizing an IRA allows you to save money as well as earn a tax deduction for the year. It’s a great last-minute deduction because you can contribute up until you file your tax return. You also can contribute all the way until Oct 15 if you apply for an extension to file your return. 

Making contributions to Simple IRAs, Simplified Employee Pension IRAs, and cash plans can also be beneficial, and also reduces the adjusted gross balance for the taxpayer. Additionally, you can’t be taxed on any of the contributions unless you withdraw on it. If needed, you can set up a brand new IRA and make the maximum contribution amount of $5,500-$6,500.

Keep in mind, an IRA is only deductible with a combined AGI of less than $96,000 or single income of $60,000. Beyond this, the deduction is limited and phases out. 

Tax-Free Bonds

Are you in a top tax bracket? Investing in tax-free bonds can be your saving grace. For combined incomes higher than $250,000, purchasing municipal bonds bring down your taxable income and can save about 3.8% off net investment income.

Health Care Tax Credit

Designed to make healthcare more affordable for small businesses, this tax credit may pay up to 35% of the health-care premiums for small-business employees. A small business is defined as any business with less than 25 full-time employees. To qualify, the small business must pay out an average yearly wage of less than $50,000 and also must provide at least half of health insurance premiums for their employees’.

This credit can be carried over for future tax years or for previous years. It is also refundable for tax-exempt employees.

Domestic Production Activities Deduction (DPAD)

Section 199 of the Internal Revenue Code makes US companies more competitive in the global marketplace. The code provides companies making products in the US with a deduction based on their manufacturing costs. To qualify, you must:

  • Conduct US-based manufacturing
  • Sell, lease, or license items manufactured and produced in the US
  • Provide US-based construction services including the building or renovation of residential and commercial properties.
  • Provide engineering and architectural services as it relates to a US-based construction project.
  • Develop software in the US

In its simplest form, the DPAD deduction is 9% of the Qualified Production Activities Income (Qualified Production Activities Gross Receipts minus Qualified Production Activities Expenses). Depending upon the size and complexity of the business, this can be a simple calculation or a complex one.

If you are curious about what last-minute deductions you may qualify for, we can help you break it all down. Our experienced tax consultants work diligently to help you understand, document and monetize both last-minute tax deductions as well as many other tax incentives for your business. Contact us to see how we can help you use your taxes to increase cash flow while simplifying your business.

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Randy Eickhoff

Randy Eickhoff

Acena Consulting President Randy Eickhoff, licensed CPA, has partnered with more than 200 companies during more than 20 years of experience securing tax credits and other government incentives. His corporate partners range from multinational technology firms to smaller, privately held manufacturing, sports, and technology enterprises.