As the year ends, now is the perfect time for businesses and individuals to fine-tune their tax strategies. With 2024 being a stable tax year, leveraging proven tactics can help minimize liabilities and lay the groundwork for a strong financial start in 2025. Below are five key strategies to optimize your year-end tax planning:
1. Maximize Retirement Contributions
Contributing to retirement accounts not only secures your financial future but also offers significant tax savings. Consider these steps:
Increase contributions to your 401(k), IRA, or SEP plans to reduce taxable income.
Take advantage of SECURE 2.0 Act provisions, such as flexible amendments and starter 401(k) plans for small businesses.
2. Utilize Depreciation and Expensing Benefits
If you’re a business owner, now is the time to optimize your purchases of equipment and machinery:
Machinery placed in service in 2024 qualifies for a 100% first-year depreciation deduction.
A 60% additional first-year allowance applies to eligible property under current tax rules.
Strategically planning asset acquisitions can maximize deductions while supporting your business growth.
3. Claim Green Energy Incentives
Energy efficiency incentives can benefit both individuals and businesses:
Homeowners can claim a 30% Energy Efficiency Home Improvement Credit for expenses like energy-efficient windows and doors.
Businesses investing in clean commercial vehicles may qualify for a $7,500 credit.
These incentives reduce tax liabilities and align with sustainability goals.
4. Defer Income and Accelerate Deductions
Timing matters when it comes to tax savings:
If you use the cash accounting method, prepay expenses like rent or supplies before year-end to increase deductions.
For accrual-based accounting, committing to deductible contracts before December 31 ensures they count for 2024.
5. Prepare for Beneficial Ownership Reporting
Under the Corporate Transparency Act, businesses must file Beneficial Ownership Information Reports (BOIR) by January 1, 2025. Proactive compliance now avoids daily penalties of up to $500 for missed filings.
Key Takeaways
Incorporating these strategies into your year-end tax planning can minimize your tax burden and set you or your business up for financial success in 2025. Be sure to consult a trusted tax advisor to tailor these approaches to your unique circumstances.
Need Expert Guidance?
At Tehrani & Velez LLP, we specialize in helping clients implement effective tax strategies. Contact us today to schedule a personalized consultation and start maximizing your savings before the year ends!