End of year tax hints

[High3rEl3m3nt]

I have a cpa. She does her job once a year but is not much of an advisor on strategies and such throughout the year—feels like what I need is outside of her lane. Maybe a new CPA? Or is the the norm from CPAS? Wish I had a biz mentor in the area who has been there and done that

[joeybagadonuts]

43 minutes ago, High3rEl3m3nt said:

I have a cpa. She does her job once a year but is not much of an advisor on strategies and such throughout the year—feels like what I need is outside of her lane. Maybe a new CPA? Or is the the norm from CPAS? Wish I had a biz mentor in the area who has been there and done that

Pm and I can help you out w some advice on this. 
 

[MonkeyF0cker]

44 minutes ago, High3rEl3m3nt said:

I have a cpa. She does her job once a year but is not much of an advisor on strategies and such throughout the year—feels like what I need is outside of her lane. Maybe a new CPA? Or is the the norm from CPAS? Wish I had a biz mentor in the area who has been there and done that

Part of running a successful business is getting the things you need and want out of the people you employ or do business with.

And the only way that happens is if you ask questions of them.  It's supposed to be a symbiotic relationship.

If they're not capable of answering the questions you need answers to, then they aren't the right fit for you.

My accountant tells me everything I should be doing to reduce my tax burden as much as possible, but I also ask him what my options and alternatives are in every scenario.

[joeybagadonuts]

17 minutes ago, MonkeyF0cker said:

Part of running a successful business is getting the things you need and want out of the people you employ or do business with.

And the only way that happens is if you ask questions of them.  It's supposed to be a symbiotic relationship.

If they're not capable of answering the questions you need answers to, then they aren't the right fit for you.

My accountant tells me everything I should be doing to reduce my tax burden as much as possible, but I also ask him what my options and alternatives are in every scenario.

Yup good advice. I own a accounting firm and the clients that get the most out of us are the ones that are constantly asking questions and running scenarios by us. 
 

We offer business consulting as well and just plain accounting and book keeping and it amazes me how often people running a business have no fucking clue what they’re doing on the business side of things , let alone the accounting/tax planning side yet still make huge profits. 

 

[WVU]

9 hours ago, milwaukee mike said:

if someone owes you money, in the year that it is reasonably assumed that they won't pay you back, yes it is legitimate to write it off as a capital loss

i have personally done it, just put their name down and say "non-business bad debt"... on the business level i have been stiffed out of a ton but that doesn't count because "cash basis" i only report income when i collect... can't double dip

 

I am thinking of using ole Griffin from 1vice

[brokerstip]

If you typically donate any money throughout the year, consider gifting appreciated stock. You will save on capital gains and if you were going to donate money anyways, good way to save.

[brokerstip]

If you don't itemize (which many don't anymore with the new limits), consider lumping your deductions every other year. Pay real estate taxes and charity every other year. 

For example, the standard deduction is $24,800 for MFJ. If you pay real estate taxes and charity (total 15k) and gets you to $23k total each year with mortgage interest, you get $49,600 total deduction (2 years of standard). If you pay 2 years of real estate taxes and charity in one year and none the next, you get $38k of deductions in year one and $62,800 worth of deductions for 2 years but paying the exact same amount.

[brokerstip]

If you have student loan debt and make a lot of money where you don't get the benefit, consider refinancing that debt with HELOC and getting it deducted on Schedule A.  Obviously need to make sure you have more than standard deduction and the interest makes sense.

[brokerstip]

consider funding state 529 plan if it's deductible. Some states allow you to get a state deduction if you contribute into their fund. This money can be used for your children or their children, etc. and don't pay tax on gains.

[brokerstip]

Fully fund your HSA if you have a high tax-deductible health plan. If you have any medical expenses, this allows you to get them deducted and you can keep funding this without having to spend the money in a given year.

[brokerstip]

8 minutes ago, brokerstip said:

If you typically donate any money throughout the year, consider gifting appreciated stock. You will save on capital gains and if you were going to donate money anyways, good way to save.

obviously get the charity deduction as well so a double win on this one.

[brokerstip]

If you have a Schedule C and pay a bunch of self-employment tax, consider making it a S-Corp to avoid self-employment tax and play the salary vs. distribution game to avoid paying a bunch of payroll taxes.

[Deemer]

1 hour ago, brokerstip said:

Fully fund your HSA if you have a high tax-deductible health plan. If you have any medical expenses, this allows you to get them deducted and you can keep funding this without having to spend the money in a given year.

Bingo

[Jimmy Hoffa]

1 hour ago, brokerstip said:

consider funding state 529 plan if it's deductible. Some states allow you to get a state deduction if you contribute into their fund. This money can be used for your children or their children, etc. and don't pay tax on gains.

I have a real problem with the 529 program in my state. I looked into it when my kids were small and I discovered that if your kids choose not to go to college you can get the money back....   But WITHOUT the accumulated interest.

NO THANKS.

 

[Bigrunner]

6 hours ago, brokerstip said:

If you don't itemize (which many don't anymore with the new limits), consider lumping your deductions every other year. Pay real estate taxes and charity every other year. 

For example, the standard deduction is $24,800 for MFJ. If you pay real estate taxes and charity (total 15k) and gets you to $23k total each year with mortgage interest, you get $49,600 total deduction (2 years of standard). If you pay 2 years of real estate taxes and charity in one year and none the next, you get $38k of deductions in year one and $62,800 worth of deductions for 2 years but paying the exact same amount.

The SALT deduction is capped at $10,000 per year. State and local taxes.

[brokerstip]

3 minutes ago, Bigrunner said:

The SALT deduction is capped at $10,000 per year. State and local taxes.

Agree......more so with charity, most people are capped with taxes already. Harder to do now than a couple years ago when it wasn't capped

[milwaukee mike]

13 hours ago, joeybagadonuts said:

Yup good advice. I own a accounting firm and the clients that get the most out of us are the ones that are constantly asking questions and running scenarios by us. 
 

We offer business consulting as well and just plain accounting and book keeping and it amazes me how often people running a business have no fucking clue what they’re doing on the business side of things , let alone the accounting/tax planning side yet still make huge profits. 

 

joey... wow i thought you were just an accountant at a company

higher... try to think about things you might not be deducting that are legitimate business expenses... meals are now 100% deductible so that's a big one, just discuss gambling or cryptos every time you eat lol...  cell phone/internet/mileage are other ones often missed because there really aren't business checks going out for them

[Bigrunner]

6 hours ago, brokerstip said:

If you have a Schedule C and pay a bunch of self-employment tax, consider making it a S-Corp to avoid self-employment tax and play the salary vs. distribution game to avoid paying a bunch of payroll taxes.

And establish a SEP or similar retirement plan and max out the annual contribution. 

[milwaukee mike]

6 hours ago, brokerstip said:

If you have a Schedule C and pay a bunch of self-employment tax, consider making it a S-Corp to avoid self-employment tax and play the salary vs. distribution game to avoid paying a bunch of payroll taxes.

this gets a little more complicated with the 20% QBI deduction on bottom line income... with that kind of income he's going to be over the SS max anyway, even with only paying himself 1/2 of the income as salary and having the other half as S Corp profits... so i think it's better to be a schedule C until that QBI goes away

[Bigrunner]

Defer income by not depositing December receipts until Jan 2nd of the new year.  Accelerate expenses by paying all bills including January bills by Dec 31st. 

[brokerstip]

13 hours ago, joeybagadonuts said:

Yup good advice. I own a accounting firm and the clients that get the most out of us are the ones that are constantly asking questions and running scenarios by us. 
 

We offer business consulting as well and just plain accounting and book keeping and it amazes me how often people running a business have no fucking clue what they’re doing on the business side of things , let alone the accounting/tax planning side yet still make huge profits. 

 

I run an accounting business and it's unbelievable what people's taxes and books look like when they are trying to make a transition. So many people have CPAs that aren't tying any numbers out on the balance sheet, showing negative CCs, negative loans and a disaster of a balance sheet. It's no wonder I get these referrals from people trying to sell their business as they don't have accurate books. So many people run their business based on how much cash is in their checking account.

[brokerstip]

3 minutes ago, milwaukee mike said:

this gets a little more complicated with the 20% QBI deduction on bottom line income... with that kind of income he's going to be over the SS max anyway, even with only paying himself 1/2 of the income as salary and having the other half as S Corp profits... so i think it's better to be a schedule C until that QBI goes away

I guess I didn't read how much this business was making. I was just assuming the normal person but it all depends on what their AGI/income is in the first place and deciding if that makes any sense.

[brokerstip]

3 minutes ago, Bigrunner said:

Defer income by not depositing December receipts until Jan 2nd of the new year.  Accelerate expenses by paying all bills including January bills by Dec 31st. 

"forget" to get your mail the last 2 weeks of December

[Deemer]

Lot of accountants here 

[joeybagadonuts]

4 hours ago, milwaukee mike said:

joey... wow i thought you were just an accountant at a company

higher... try to think about things you might not be deducting that are legitimate business expenses... meals are now 100% deductible so that's a big one, just discuss gambling or cryptos every time you eat lol...  cell phone/internet/mileage are other ones often missed because there really aren't business checks going out for them

Senior Accounting Manager at midsized tech company during the day, and run an accounting consultancy business by night. 
 

Built the side gig out the last year or so. Have 3 CPAs including my lil buddy (poker guys will get this joke ) and a CFA to do modeling and valuation as well as a few on call book keepers. Plan to retire from the corporate world next year to go all in on the side biz