2023 Tax Calendar
VIEWpoint Issue 2 | 2022
Inflation Reduction Act: Highlights of Key Changes for You and Yo...
The 2022 Gift Tax Return Deadline Is Coming Up Soon
HUD Strengthens the Effects Test
President Biden’s Proposed Budget Includes Notable Tax Provis...
As year end nears, you’ll want to turn your attention toward manufacturing accounting and tax planning to reduce your company’s tax liability while there’s still time to do so. Here are three ideas to consider:
A good place to start is your inventory. Review goods in the inventory balance to ensure that old or obsolete goods have been disposed of and expensed. Another important account to scrutinize is receivables. It’s a good idea to regularly monitor the aged receivables and promptly write off accounts that are uncollectible.
When it comes to tax savings, sometimes when you record an invoice is just as important as how much you pay. If you can post an expense this year instead of next year, it may reduce this year’s liability. For example, if your company plans to pay employee bonuses in January 2013, consider what effect accruing them in December 2012 would have on your tax bill.
Determine whether your company is eligible for the domestic production activities deduction. It’s one of the best — and most complicated — tax breaks specifically for manufacturers, often referred to as “the manufacturers’ deduction.”
One of the main purposes of this deduction is to provide tax relief to manufacturers that produce goods in the United States. In 2012, manufacturers can deduct up to 9 percent from taxable production income.
Keep in mind that the domestic production activities deduction is limited to 50 percent of the W-2 wages paid to workers involved in qualified domestic production activities. To qualify for the deduction, document the goods you produce and location where you produce them. In addition, be prepared to document the activities of workers and their related payroll expenses.
Businesses typically deduct the cost of buildings during a long period of time. Cost segregation, however, allows you to determine whether parts of your manufacturing facility qualify for faster cost recovery, thereby allowing you to lower your tax liability in the current year.
A cost segregation study is an engineering-based analysis involving input from architects, engineers, contractors and tax experts that reclassifies building property into four categories:
A cost segregation study can garner immediate tax savings through accelerated depreciation, as well as make it easier to write off broken, obsolete and damaged assets in future years.
Doeren Mayhew specializes in manufacturing accounting, offering traditional CPA services as well as industry-specific services. For more information, contact a manufacturing CPA in Michigan, Houston or Ft. Lauderdale.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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