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Rebekah Poirier

12 Days of Tax Planning?!

Tis’ the season! No I don’t mean shopping, baking and giving (although that too!). I mean it’s time to do some tax planning! Here is my “12 days of Year-end Tax Planning” list you can start now!


Day 1 Consult a Tax Professional: Consider seeking advice from a tax professional or financial advisor before December 31. They can provide personalized strategies and ensure compliance with tax laws.


Day 2 Estimated Tax Payments: You should be making any required estimated tax payments to avoid penalties for underpayment. This is especially important at the end of the year. Be sure to review your profit and loss statement early in January and make any catch-up payments needed before you file your taxes.


Day 3 Review Your Income and Deductions: Take stock of your income streams and consider maximizing deductions. This includes contributions to retirement accounts, charitable donations, and any business expenses you can claim. You may also want to postpone income to the next tax year to reduce the tax burden in the current year.


Day 4 Assess Investment Portfolios: Review your investment gains and losses. Consider tax-loss harvesting by selling investments that have incurred losses to offset gains and reduce your taxable income.


Day 5 Maximize Retirement Contributions: Contribute as much as possible to retirement accounts like 401(k)s, IRAs, or HSAs. These contributions can lower your taxable income and grow tax-deferred.


Day 6 Consider Roth Conversions: Evaluate the benefits of converting traditional retirement accounts to Roth IRAs. While the Roth IRA contributions are not tax deductible now, it provides tax-free growth and withdrawals in retirement.


Day 7 Donate to Charity: Make charitable donations before year-end to qualify for deductions. Remember to gather receipts for all charitable contributions.


Day 8 Set-up Donor-Advised Funds: Consider setting up a donor-advised fund to maximize charitable giving while receiving immediate tax benefits. A donor advised fund works as a charitable investment account, where assets like cash, stock, and even crypto currency can be donated for immediate tax deduction. You can use these funds to contribute assets and decide on donations later. Meanwhile, the earnings grow tax free!


Day 9 Expense Deductions: Accelerate deductible business expenses before the year ends to reduce taxable income. This could mean paying a bill early, increasing your retirement contributions (see above), write off bad debts, schedule repairs on business assets before the end of the year, and time your doctor appointments to maximize the medical deductions.


Day 10 Defer Income: Deferring some of your income can do more than just postponing your tax liability. It can also lower your tax bracket and your adjusted gross income, which is used to calculate business deductions. You can defer income by delaying collections, deferring compensation, holding off on selling investments and other assets.


Day 11 Section 179 Deduction: Utilize Section 179 to deduct the a portion of the purchase price of qualifying equipment or software purchased or financed during the tax year. Be sure to speak with your tax professional to determine what qualifies and how much can be claimed.


Day 12 Real Estate and Property: Consider paying property taxes before year-end to increase deductions, especially if you itemize deductions on your tax return. You should also evaluate the benefits of real estate investments, including depreciation deductions and tax-deferred exchanges.


Taking proactive steps before the year ends can significantly impact your tax liabilities and financial well-being. However, it's crucial to balance tax-saving strategies with your overall financial goals and circumstances. If you have any questions, please contact me at rebekah@serenitycfo.com for more information.

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