What are some year-end tax planning strategies I should know?

1 Minute Read

Have you begun your year-end tax planning process yet?

The fourth quarter is the time for proactive tax planning to lower your tax bill. For business owners, tax planning shouldn’t be a once-per-year exercise.

Tax Planning Tips

Here are six, tax-planning tips to consider before year-end.

  • Review your business entity setup (see What’s the best business formation setup in this booklet). As your business grows, your structure (entity) may change.
  • Review your retirement plan. Slash taxes by establishing a retirement plan such as a SERP IRA, Solo 401(k), or a combination of a 401(k) with a defined-benefit pension plan (see How can I maximize tax savings using my retirement account in this booklet).
  • Home office deduction. This valuable tax break can save hundreds, or even thousands, of dollars in taxes each year.
  • Avoid shoebox bookkeeping. Track income and expenses throughout the year using a cloud-based tool your accountant can access.
  • Claim first-year, 100 percent bonus depreciation on new property acquired and placed in service during 2021. If you’re having a big income year, consider moving up big purchases before year-end (see Should I buy equipment for year-end in this booklet).
  • Proactive tax planning. For the tax year 2023, the top tax rate remains 37% for individual single taxpayers with incomes greater than $578,125 ($693,750 for married couples filing jointly).

Be proactive in your tax planning. If you expect to be in the same or lower tax bracket next year, try to defer some income from this year to next year. If you expect a higher tax bracket, accelerate income in 2022 or delay deductions until 2023.

More Tips

Don’t miss out on other tax tips. Download our new, Year-End Tax Planning Guide for business owners.