Six Strategies to Make the IRS Work for You: Maximize Your Deductions in 2024

Achieving business tax savings is easier than you think. With a few strategic actions, you can reduce your tax bill and keep more cash in your business. Here’s a step-by-step guide to six effective tax deduction strategies to implement before the end of 2024.

Strategy 1: Prepay Expenses Using the IRS Safe Harbor

Quick Tip: Prepay up to 12 months of qualifying expenses to maximize your 2024 deductions!

How It Works: The IRS Safe Harbor rule allows cash-basis taxpayers to prepay certain expenses and deduct them immediately, reducing this year’s taxable income.

Example: Paying $36,000 upfront for a year’s rent on December 31, 2024, lets you deduct the full amount in 2024, even though the landlord receives it in January.

Strategy 2: Delay Billing to Shift Income to Next Year

Action Step: Pause client billing until January to move income to 2025.

Why It Works: For cash-basis taxpayers, income is recorded when received. By delaying billing, you can push December’s income into the following year, reducing 2024 taxable income.

Example: Jake, a dentist, waits until January to bill clients, moving his December earnings to the next tax year.

Strategy 3: Buy Office Equipment for Immediate Write-Offs

Eligible Purchases:

• Machinery

• Office equipment (desks, computers, chairs)

• Certain qualifying vehicles

Bonus Tip: Both Section 179 and bonus depreciation allow for major tax savings if purchases are made by December 31.

Strategy 4: Use Your Credit Card for End-of-Year Expenses

Important: Charges on business expenses count for 2024 if made before year-end, even if you pay the bill later!

If you’re a sole proprietor, any business expenses charged to your credit card before December 31 are deductible for 2024.

Strategy 5: Document Every Deduction

Why You Shouldn’t Worry About Too Many Deductions: Even if your deductions exceed income, creating a Net Operating Loss (NOL) lets you carry that loss forward to future tax years. This can translate into future cash flow benefits.

Strategy 6: Improve Your Property with Qualified Improvement Property (QIP)

Note: Make sure improvements are in service by December 31 to qualify!

What is QIP?QIP includes interior improvements to non-residential property, such as offices or retail spaces. These improvements qualify for Section 179 expensing and bonus depreciation, allowing immediate or faster write-offs.

Need Help? For personalized advice on maximizing deductions, contact one of our tax professionals to guide you through these strategies.

Maximize Your Deductions Today!