The best tax deductions for 2012!

By Jeffrey Brooks, CPA, CFP, MBA for JBrooks Wealth Advisors, PC, a Professional CPA and CFP Firm jeff@jbrookswa.com 602-292-2009 Please consult with your professional tax CPA regarding your specific circumstances!

Health Savings Accounts. Most of us have high deductible health insurance. If you have over $1,200 deductible for you and over $1,200 for your spouse, it is smart to establish a HSA. I have written extensively on HSAs. I have been interviewed on HSAs.

Car expenses. The rule is you can deduct the costs of operating a car only when that car is being used for business purposes. Keep track of the miles you drive and add them up at the end of the year. The deduction rate in 2012 is 55.5 cents per mile for business-related driving. What is an easier way to keep track of your business auto mileage? Use your calendar or smart phone Aps.

Travel. In addition to car travel, you can also deduct the cost of plane fare, taxis, lodging and meals as long as the trip was undertaken primarily for a business purpose. Additionally, travel expenses paid or incurred in connection with a temporary work assignment away from home are deductible.

Education. As a small business owner, staying up to date on the complexities of your industry is imperative for operating a successful business. Invest in yourself to become smarter and more effective. You can deduct education expenses if the courses you take are related to your field and help you run your business.

Software. Most software programs bought for business purposes have to be depreciated over a period of 36 months. But if the software is only useful for less than a year, you can deduct its cost as a business expense in the year that you buy it. With rapid changes in technology and software constantly being updated and replaced, this is becoming a more common source of tax savings.

New Equipment. The key here is “new.” Section 179 deduction can sometimes allow a small business owner to write-off the full costs of new equipment in the same year they were purchased. This year you can write-off up to $139,000 in expenses, and half of what you spend above that amount. The write-off starts to decline once your total spending exceeds $560,000.
Profit Sharing. Your contributions to retirement plans (and often plan expenses) are generally tax-deductible. You may also be eligible for a tax credit for establishing a qualified retirement plan. SOLO 401Ks are very favorable to husband and wife owner employees because the maximum allowed retirement plan contribution is allowed with a minimal amount of salary.

Carryback. In addition to tax-deductible expenses, executing a net operating loss (NOL) carryback is another good way to recoup some of the losses you suffered during the recent economic crisis. This deduction allows you to offset one year’s losses against another year’s income. Calculating a NOL can be tricky and we suggest that, if you have one, you consult a tax professional to help ensure you do it correctly.

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About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

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JBrooks Wealth Advisors, PC.

Certified Public Accountant
Address: 4647 N 32nd Street, Suite B245
Phoenix, Arizona 85018
Phone: 602-292-2009
Email: jeff@jbrookswa.com