The end of the calendar year is soon about to close, and many are wondering how to be able to pay less in taxes. It just takes a sit-down and figuring out your strategy. We think that a few components of an easy-to-follow game plan make powerful tools to realize your goal.
- Prepay expenses using the IRS safe harbor
- Stop billing clients/patients in December
- Catch holiday and end-of-the-year sales and buy office equipment
- Use your credit cards
- Don’t assume you are taking too many deductions
Firstly, where your taxes are concerned, business tax deductions are key. Don’t you go thinking you’ve got too many already. The more business tax deductions you claim, the less you pay in regular taxes. One strategy is to prepay your 2017 qualifying expenses now, before 2016 closes; you’ll be enjoying that tax deduction this year. Another time-tested strategy is to stop billing your customers until after the last day of 2016. Doing so is postponing paying taxes on your December income.
Another is buying your company’s new assets, like computers, photocopiers, or office tables and chairs, or use your company’s credit card to purchase some office supplies and other necessities before the close of December. It’s also a great time to get your hands on holiday deals. Like what we say, if you have legitimate deductions, by all means use them. Spend now to be able to enjoy those tax deductions for the current year and pay less taxes for them.
It’ll be good to know also for Washingtonians, that as a result of the recent November elections, the Washington state minimum wage will go up to $11 dollars starting January 1st, 2017. This should enable a reasonable boost in spending, and with the above strategy, pay less in regular taxes for the coming year.