If you are feeling the pressure of tax season, you are not alone. Every year we hear from business owners who say, “I wish I had planned earlier.” The good news is there are still a few smart moves you may be able to make before you file.
Here are four last minute ways to potentially reduce your tax bill.
- Maximize retirement contributions. If you have a SEP IRA, Solo 401k, or traditional IRA, you may still be able to make contributions for the prior year before the filing deadline. These contributions can reduce your taxable income while building your long term savings. For example, if your business had a strong year and your profit is higher than expected, contributing to a SEP IRA could lower the income that gets taxed.
- Review and capture all deductible expenses. Go back through your personal bank and credit card statements. Look for legitimate business expenses that may not have been categorized properly. This could include software subscriptions, business meals, mileage, professional fees, or home office expenses. Missing deductions often happen simply because records were incomplete or miscategorized.
- Contribute to an HSA if eligible. If you have a high deductible health plan, you may qualify to contribute to a Health Savings Account. Contributions are typically tax deductible and can reduce your taxable income while setting aside funds for medical expenses.
- Make sure estimated payments and credits are applied correctly Review your prior estimated tax payments to confirm they are reflected on your return. If you made quarterly payments, you want to ensure you are getting credit for every dollar paid. Small errors here can lead to overpaying or underpaying.
Before filing, double check your personal and business information. Make sure your Social Security number or EIN, bank details, and calculations are correct. Minor mistakes can cause delays or notices.
Last minute tax savings are helpful. But the bigger win is year round planning. When your books are clean and your numbers are current, you have more options. If you would like help reviewing your financials for this year, we would love to support you.
