Recordkeeping

For all deductions claimed and revenues received, keep safe the digital copies of your invoices, receipts, contracts and other pertinent documents for at least 7 years, ideally forever, in case of audit or other financial/legal requirements. It can only help you.

Retirement Accounts and Health Savings Accounts (HSAs)

Contributions to 401(k)’s must be made by December 31 to count for the current year. IRA’s and HSA’s offer more time with a deadline of April 15 of the following year.

Charitable Contributions

Contribute to IRS qualified charities by December 31 (and retain proper documents) if they can increase your itemized deductions to total more than the standard deduction. You can generally deduct cash donations up to 60% of AGI and non-cash donations up to 30% of AGI. The specifics of deductibilities are more complex. Consider donor-advised funds for greater flexibility in planning and maximizing deductions.

Big Truck, Big Deductions

If the vehicle weighs over 6,000 pounds and is used at least 50% for business, you can claim bonus depreciation on it. To maximize your deduction, consider using it exclusively for business in the final months of the year. This approach can increase your deductions significantly, especially if you maintain over 50% business use throughout the vehicle’s life.

Prepay and Prosper

Anticipate expenses like tech upgrades, property maintenance, or subscriptions? Prepaying them now can shift deductions to the current year.

Shift Income to Children

If you pay your children to work in your business, ensure payments are completed by December 31 and W-2’s are issued by the following January 31.

Harvest Tax Loss for Capital Gains

Selling assets that have lost value can offset your capital gains or even reduce your ordinary income by up to $3,000. This applies to stocks and, in some cases, real estate. If you plan to re-buy an asset, be sure to comply with the 30-day wash-sale rule.

Real Estate Professional Status (REPS)

If you meet the REPS requirements, any properties placed in service before year-end can qualify for bonus depreciation, allowing investors to write off significant portions of their purchase. While meeting the REPS threshold requires a longer commitment, year-end is a good checkpoint to ensure time logs are complete and accurate.

Cost Segregation Timing

A cost segregation study can increase deductions by identifying portions of a property that qualify for accelerated depreciation. And the study does not need to be completed by December 31. Just make sure the property is placed in service by year-end. You can finalize the cost segregation study before filing your tax return to lock in the deductions.

Short-Term Rentals

If you’re considering​ purchasing a short-term rental, year-end can be a great time to do it. By keeping the average rental period under seven days and meeting material participation requirements, you may qualify for significant tax benefits through the short-term rental (STR) loophole. This strategy requires planning, but it can yield substantial deductions if executed before year-end.

Entity Structure

Evaluate your current business structure and consult us to ensure optimal tax efficiency.