Email Adam Email
Financial
Dec 1, 2016

Start Shaping Your Tax Situation Now

Sponsored Content provided by Adam Shay - Director of VCFO Services, Red Bike Advisors

The year is almost over, so you have only a few more weeks to shape your 2016 tax situation. 

With tax rates expected to decrease in 2017, it may be more important than ever to take advantage of tax planning in 2016 in order to maximize the benefits of your tax deductions. Tax planning is generally easier to have an impact for business owners and individuals with more complex situations, as the more moving parts you have the more you can engineer your situation.

So what is tax planning?

Rather than waiting until your tax filing to find out what the tax year did to you, you take control and shape your tax situation as optimally as possible. The process generally involves projecting your expected income and a couple of variations of that scenario then coming up with a plan to implement.

Depending on how organized you are, there can be some legwork in the process as you look to figure out where your 2016 income is expected to fall.

A common goal in tax planning is to defer income and accelerate expenses. That strategy can work but is also an endless game once you start it - you’ll continue to do it for all subsequent years. You need to realize there are rules related to this strategy. 

If you are a cash basis taxpayer and you receive cash for the year then that money is income for the year, whether you choose to deposit it or not. On the expense side, for a cash-basis taxpayer, the money actually needs to go out by the end of the year. For accrual basis taxpayers, when you do the work is going to drive revenue recognition, and when you receive a bill is going to generally drive expense recognition. 

Under either basis, you have to be careful that you are not doing a prepayment of expenses, which is considered an asset and not a deduction.

The 2016 tax year doesn’t have as many specific portions of the tax code expiring as normally do in a given year because the tax extender provisions were extended for more than one year.
In other words, we’re normally sitting here at the end of a tax year with uncertainty on what tax provisions will continue into the future. This year, not so much.

A specific item expiring in 2016 pertains to renewable energy, such as wind and geothermal heating and cooling.

Whether you are considering a renewable energy investment or would just like to shape your tax situation to be more optimal, we encourage you to look at tax planning with a tax professional before the year is up. 

My goal today is to inform you of the benefits of tax planning and working to optimize your tax situation.

Adam Shay, CPA (N.C. License Number 35961), MBA, is managing partner of Adam Shay CPA, PLLC. He focuses on minimizing taxes and improving the financial results of entrepreneurs, and is actively involved in supporting the Wilmington entrepreneurial and startup community. For more information, visit http://www.wilmingtontaxesandaccounting.com/ or email him at [email protected]. He can also be reached by phone at (910) 256-3456.
 

Other Posts from Adam Shay

Redbikeadvisors block[55]
Ico insights

INSIGHTS

SPONSORS' CONTENT
Untitleddesign14 3325110041

How Does the Property Tax Valuation Appeal Process Work?

Larry Shaheen - The McIntosh Law Firm
Untitleddesign12 101824110415

Tips When Updating Your Business’s Burglar Alarm System

Luke Wheeler - Holmes Security
Cfss headshots parker robert webversion 21422121214

Duke Energy Will Pay You Up to $9,000 to Go Solar with a Battery

Robert Parker - Cape Fear Solar Systems

Trending News

Tech Wilmington: Upcoming Events Calendar

Staff Reports - May 21, 2025

Next Glass Comes Back For Downtown Refill

Emma Dill - May 19, 2025

Army Corps Recommends Minimum Height For Cape Fear Memorial Bridge Replacement

Emma Dill - May 21, 2025

LS3P Announces Employee Recognitions

Staff Reports - May 20, 2025

Edwards Promoted To City's Corporate Affairs Director

Staff Reports - May 20, 2025

In The Current Issue

School Calendar Remains A Subject Of Concern For Tourist Industry

When tourism officials from communities across North Carolina get together for their annual conference, they can count on one discussion top...


Downtown Retail Space Gets Hot

Pepper Palace is one of the newest additions to downtown Wilmington’s mix of retailers. Crispy Cones, Marked Merchant and Beauty Bar are som...


CEA Nonprofit Winner: Organization Helps Health And Home

The organization formed to provide children as young as 4 and young adults as old as 21 living in the Wilmington area with custom living arr...

Book On Business

The 2024 WilmingtonBiz: Book on Business is an annual publication showcasing the Wilmington region as a center of business.

Order Your Copy Today!


Galleries

Videos

2024 Power Breakfast: The Next Season