The holidays are a time for surprises—presents, parties, maybe even a snow day or two. But there’s one surprise you definitely don’t want: a shocking tax bill in April.
The good news? You still have time before December 31 to make some smart moves that can shrink your tax liability and keep more money in your pocket. Think of it as a gift to your future self.
Here are a few strategies to unwrap before year-end:
1. Max Out Retirement Contributions
Contributing to retirement accounts like a 401(k) or IRA doesn’t just help future-you—it also lowers your taxable income today.
- For business owners with employees: Consider making contributions to your company retirement plan.
- For solopreneurs or freelancers: Look into a SEP IRA or Solo 401(k).
Extra perk: retirement contributions often double as a business expense and a tax deduction.
2. Time Your Income & Expenses
If you’re on the cash basis of accounting (most small businesses are), you can sometimes control when income and expenses hit your books.
- Delay sending an invoice until January if it makes sense to reduce this year’s income.
- Accelerate expenses by prepaying for services, buying supplies, or upgrading equipment before December 31.
It’s like choosing when to open your gifts—sometimes waiting pays off.
3. Make the Most of Deductions
Don’t miss out on deductions you’re entitled to:
- Home office expenses
- Mileage or vehicle costs
- Professional education and certifications
- Business software and subscriptions
- Interest on business loans or credit cards
Every overlooked deduction is like leaving money on the table (or forgetting candy in the trick-or-treat bowl).
4. Check Estimated Tax Payments
If you’ve had a profitable year, your estimated payments might not be keeping up. Catching up before December 31 can help you avoid penalties and the dreaded “underpayment” letter from the IRS.
Think of it as topping off the gas tank before a road trip—better safe than stranded.
5. Charitable Contributions
’Tis the season for giving, and giving can give back at tax time. Contributions to qualified charities can be deducted (just be sure to keep receipts and verify the nonprofit status).
Bonus idea: donate appreciated assets like stock—it could save you even more in taxes than cash donations.
Wrap-Up: Don’t Wait Until the Ball Drops
The key to avoiding tax surprises is acting before December 31. A few smart moves now can mean a lower bill (and a happier April).
Next Step: Review your books, talk to your accountant, and make your year-end tax plan while there’s still time. Future-you will thank present-you.
Want to take your tax planning to the next level? Contact Ledger Right Contact Us
