As we approach the end of the year, it’s the perfect time to think about your taxes. With some smart planning, you can save money and set yourself up for success next year. Here’s a friendly guide to help you make the most of tax season without the stress.
Max Out Your Savings: Grab Those Deductions
Want to lower your tax bill? Deductions are your best friend! Here’s how you can make the most of them:
- Capture Every Expense: Take a moment to look over all your expenses this year. Did you buy supplies or pay any fees? Make sure you’re tracking every penny you spent.
- Prepay If You Can: If you’re paying for things like rent or utilities in cash, try prepaying some bills before December 31. You’ll get to count them as expenses for this year.
- Don’t Miss Equipment Deductions: Bought some new equipment? The IRS Section 179 lets you write off the full cost. That means more savings for you!
Why Delay That Income? Timing is Everything
Think you might make less money next year? It could be smart to delay some income until January. If possible, wait to send out some invoices or close that deal until after New Year’s. It’s a simple move that can help you owe less in taxes this year.
Invest in Your Future: Supercharge Your Retirement Plan
Saving for retirement doesn’t just help your future self – it can also help you pay less in taxes today.
- Boost Those Contributions: If you already have a retirement plan, try to add as much as you can before the end of the year. More contributions now mean more savings!
- Start Fresh: Don’t have a plan yet? You still have time to start one before the year ends, and some even let you make contributions after December 31.
Quick Tip: Contributions to accounts like a traditional IRA can reduce how much tax you owe.
Get Those Extra Benefits: Don’t Forget Tax Credits
Tax credits are like magic – they directly reduce the amount of tax you have to pay. Here are some credits to check out:
- The R&D Credit: If you’re working on something new or improving your products, you might qualify for this credit.
- Hiring Incentives: If you’ve hired employees from certain groups, like veterans, you might be eligible for the Work Opportunity Tax Credit.
- Go Green: Made energy-efficient upgrades? Look into energy tax credits!
Don’t Get Caught Short: Make Sure You’re Covered with Estimated Taxes
Nobody likes penalties, so make sure you’ve paid enough estimated taxes this year. Double-check how much you’ve earned and compare it with your estimated payments. If you’re not sure, it’s worth taking a second look.
Pro Tip: If you expect to owe at least $1,000, the IRS expects you to make payments every three months.
Is It Time to Rethink Your Business Structure?
Maybe your business has grown, or your situation has changed. It might be worth considering whether your current setup (LLC, S-Corp, etc.) still makes the most sense. A quick chat with a tax expert can help you find the best structure for tax savings.
Clear Out the Clutter: Get Rid of Old Inventory
If you sell products, take some time to go through your inventory. Write off anything that’s old or unsellable. This could give you a nice deduction and help lower your taxable income.
Make It Personal: Talk to a Tax Professional
These tips are a great start, but everyone’s situation is different. Talking to a tax pro can help you tailor a plan that fits you perfectly and makes sure you’re not missing out on any savings.
Wrapping It All Up
Getting a handle on your taxes before the year ends is a smart way to save money and prepare for a successful year ahead. With these tips, you can take control of your tax planning and make the most of every opportunity. And remember, when in doubt, a tax expert can be your guide to make sure you’re on the right track!
