6 End-of-Year Tax Deduction Strategies to Reduce Your 2024 Tax Bill
As the year draws to a close, it’s the perfect time to implement 2024 tax deduction strategies that can significantly reduce your tax burden. Whether you’re a business owner or self-employed, these six powerful tax-saving tips can help you maximize your deductions and keep more of your hard-earned money.
1. Prepay Expenses to Claim Tax Deduction Now
The IRS allows cash-basis taxpayers to prepay certain expenses and deduct them up to 12 months in advance. This safe harbor rule can help you take advantage of deductions in 2024 for expenses that would typically apply to 2025.
For example, you could prepay business vehicle leases, office rent, or insurance premiums by December 31, 2024, and claim the deduction this year. It’s a great way to reduce your taxable income before the year ends.
2. Postpone Income to the Next Year
If you’re a cash-basis taxpayer, deferring income until after December 31 can push it into the next tax year. By delaying customer billing or payments until January, you postpone the taxes owed on that income.
This strategy is particularly effective for business owners who want to manage their taxable income year by year. For example, a professional like a dentist or consultant could delay sending invoices in December to shift income into 2025.
3. Invest in Office Equipment for a 2024 Tax Deduction
Purchasing office equipment or machinery before December 31 can result in substantial tax savings. Section 179 expensing and bonus depreciation rules allow businesses to write off most equipment costs immediately, including new and used items like furniture, computers, and certain vehicles.
If you’ve been considering upgrading your office or investing in tools for your business, now is the time to act.
4. Use Credit Cards for Last-Minute Expenses
For sole proprietors and single-member LLCs, the date you charge a business expense to your credit card is the date you can claim the deduction—regardless of when you pay the bill.
This is an excellent way to make last-minute purchases, such as office supplies or other necessities, and still deduct them for 2024. For corporate entities, ensure any reimbursed expenses are processed by December 31 to qualify for this year’s deductions.
5. Don’t Skip 2024 Tax Deductions, Even if They Create a Loss
If your deductions exceed your business income, you may create a net operating loss (NOL), which can be carried forward to offset taxable income in future years.
Document all your expenses carefully and claim all eligible deductions, even if it results in a loss. This can lead to significant tax savings in the years ahead.
6. Take Advantage of Qualified Improvement Property (QIP)
If you’ve made interior improvements to non-residential property, such as office buildings or retail spaces, those expenses may qualify for accelerated depreciation. QIP allows you to deduct the improvements over 15 years or claim immediate deductions using Section 179 expensing or bonus depreciation.
To benefit from this, ensure the improvements are placed in service by December 31, 2024.
Take Action Before December 31
Implementing these strategies now can make a significant difference in your 2024 tax bill. At Ken-Mar Tax, we specialize in helping business owners and self-employed individuals navigate complex tax rules to minimize their tax liability.
If you’d like personalized advice or assistance with your year-end tax planning, contact Ken Weinberg, EA, today at 440-777-2207 or fill out our contact us form. Let’s make sure you’re taking full advantage of every tax-saving opportunity available to you!
Related Posts:
Can You Write off More Than One Vehicle?
Can I Deduct My Dog or Cat on My Taxes?
Can You Deduct a Home Office if You Have Another Office Outside the Home?
Understanding Tax Representation: Cleveland Tax Attorney or an Enrolled Agent?
Small Business Tax Services
As an expert in small business tax services and tax consulting Ken-Mar Tax eats, sleeps and breathes small business tax strategies. Being an enrolled agent allows founder, Ken Weinberg, to represent you to the IRS - something only a CPA, tax attorney and Enrolled Agent can do. EAs are the only federally licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS. It also means he is continuously being updated on the new IRS tax codes and taking classes from the IRS that provide guidance on how to file returns so that they are not "flagged."
When you get your taxes prepared by Ken Mar Tax you also have the option to purchase the Tax Audit Protection Plan to avoid the extra costs of paying for audit representation. If you are audited by the IRS, State of Ohio or local taxing authorities, Ken-Mar Tax will meet with the taxing authorities on your behalf to negotiate a settlement for you. The fee covers all costs up to the Appeals level, including up to 15 hours of correspondence with the auditing party – either the IRS, State of Ohio or locality.
