What are your new year’s resolutions for 2017? To lose weight? To exercise more?
Here’s another resolution you should make and act on now.
Put your safe harbor de minimus expensing in place!
Why is it worth doing so immediately?
Because Uncle Sam’s safe harbor eliminates the burden of …
- Tracking small-dollar cost assets in your books of account
- Depreciating (and/or Section 179-expensing) those assets in your tax returns and books of account
- Making sure to remove the assets from your books when you remove the assets from your business
Want to find out how to go about sailing into your own safe harbor?
Get on board and read my new article titled Tax Tips: Put Your $2,500 Expensing in Place Now ($5,000 with AFS).
Four steps to creating a safe harbor.
Step #1: Have (and stick to!) an expense policy. For safe harbor protection, you must have an accounting policy in place at the beginning of the tax year … a policy that requires expensing of an amount of your choosing, up to the $2,500 or $5,000 limits. You’ll get all the details when you read the full article.
Step #2: Put your expense policy in writing. This is extremely important and you must do it promptly. We’ll provide some appropriate language you can use when you read the full article.
Step #3: Save all your invoices. The safe harbor only applies to items documented by invoices. The invoices prove that you made the purchases. And the cancelled check or credit card charge proves you paid them. We’ll explain everything when you read the full article.
Step #4: Make the election on your tax return. To make your safe harbor election, attach a statement to your federal tax return and file it on time. We’ll provide language you can use to make your election when you read the full article.