Tax planning isn’t limited to year-end and your review at the start of a new year. Being proactive and reviewing your tax strategy mid-year can give you a competitive edge and set you up for success come the 2024 tax season.
WHAT TO LOOK AT
During the summer months, review your deductible business expense records. Every expense you document — travel, meals, entertainment, office supplies, equipment, etc. — can reduce your taxable income. Check out your contributions to tax-advantaged retirement accounts. Can you increase them? By doing so, you can benefit from potential tax deductions and credits.
Make sure you get your business’s quarterly tax reports filed and paid to the IRS. Assess your business’s financial situation and estimate income for the rest of 2024. Estimating your tax liability and making timely payments helps you avoid any tax surprises.
MAXIMIZE DEDUCTIONS AND CREDITS
Consider organizing a summer team building event or a client appreciation outing. The costs associated with these activities may be deductible. Keep detailed records and receipts to substantiate these expenses.
If you have a legitimate business reason to travel somewhere that might mix well with a family vacation, you may be able to deduct your individual business-related expenses, but not the family’s.
Business renovations and improvements are often best done during the summer months. Consider whether this summer is the time to tackle those projects. Before starting, make sure you understand which expenses — energy efficient improvements, for example — qualify for tax deductions or credits. You could reduce your potential 2024 tax bill.
ESTIMATE YOUR TAX LIABILITY
One common mistake business and personal taxpayers make during summer, and any other season’s, tax reviews is underestimating their potential tax liability come year-end.
Underestimating income can result in an underpayment and possibly penalties. Relying only on online tax calculators or generic tax advice can lead to oversights and missed opportunities for tax savings. That’s why many tax experts recommend you secure professional guidance.