Year-End Tax Reduction Strategies

Year-end tax reduction strategies by category: Retirement Contributions: Maximize 401(k), 403(b), or Solo 401(k) deferrals. Contribute to traditional IRA if eligible. Consider backdoor Roth conversions in low-income years. Business Deductions: Accelerate equipment purchases (Section 179/bonus depreciation). Prepay deductible expenses (insurance, supplies, professional fees). Consider additional retirement plan contributions for employees. Investment Strategies: Harvest tax losses to offset gains. Defer gains by avoiding sales until next year. Consider charitable donations of appreciated securities. Healthcare: Maximize Health Savings Account (HSA) contributions. Use Flexible Spending Account balances before year-end. Charitable Giving: Bunch charitable deductions into high-income years. Consider donor-advised funds for timing flexibility. Donate appreciated assets instead of cash. Income Deferral: Delay bonus or consulting income until January. Consider installment sales for large asset dispositions. Tax Credits: Ensure energy-efficient home improvements qualify for credits. Review eligibility for other available credits. Entity Strategies: S Corp distributions vs salary optimization. Consider entity elections or conversions. Timing Considerations: Some strategies require action before December 31. Others allow until tax filing deadline.