What Year-End Tax Strategies Are Available to Business Owners?
There are a couple of weeks left before the year ends, and small business owners should be thinking about ways to reduce their tax burden before year-end to maximize savings. That is why in this episode Mike is going to be discussing year-end tax strategies, such as bonus depreciation, credit card reimbursement, prepaying expenses, and buying equipment for your business, among other things. [00:00] What Do I Need to Prepare for Tax Savings at Year-End• The IRS safe harbor rule allows cash basis taxpayers to prepay and deduct qualifying expenses up to 12 months in advance.• This includes business insurance premiums but basically you can prepay up to 12 months in advance and get the deduction here in the year that you make the payment.• Not billing customers, clients or patients temporarily can shift income from this year into a future year. [04:23] Strategies to Save on Taxes • Buying equipment or vehicles now can potentially save money in taxes in the future but remember only buy things that your business really needs and will use.• Bonus depreciation is still at 100% in 2022, but it will be reduced each year after that.[08:37] Don't Overthink Making Deductions• Mike shares on why you can deduct the full $100,000 in 2022 using a 100% bonus depreciation. And if you wait until 2023, you're only gonna be able to deduct $80,000 or 80% in bonus depreciation in year one.• He also discusses if you should rush out and purchase business property before 2022 ends to take advantage of that 100% bonus depreciation and why is not necessarily the case. [12:46] Prepaying Expenses for a Tax Deduction • If your business expenses exceed your income, you have a loss for the year. This is called a net operating loss and can be carried forward.• You should never stop documenting your deductions and claiming what is rightfully yours.• Prepaying expenses can help you move income from one year to another, and can also create a tax loss in the year you prepay them. [16:45] A Recap of Tax-Saving Strategies• Try to always your credit cards in most cases.• Don't assume you're taking too many deductions.• If you are not operating at a loss, don't be afraid that loss is gonna carry forward an offset future income.• Don't stop taking deductions that are valid legal and available to you simply because you don't want to go to a loss.[18:09] Closing Segment• Final wordsKey Quotes“Do not assume you are taking too many deductions. The IRS code was written the way it was for a reason, so that you as a business owner can take advantage of it”. – Mike JesowshekResources MentionedBlog Posts: · https://www.taxsavingspodcast.com/blog/what-year-end-tax-strategies-are-available-to-business-owners· https://www.taxsavingspodcast.com/blog/what-is-depreciation-for-my-business-when-does-a-capitalization-policy-make-sense· https://www.taxsavingspodcast.com/blog/what-do-i-need-to-prepare-for-tax-savings-at-year-endLast Episode · https://podcasts.apple.com/us/podcas