As the year draws to a close, proactive tax planning can make a significant difference for both individuals and businesses. At DJ Consulting, we help clients identify opportunities to minimize liability and strengthen financial outcomes before the new year begins. Here are five key moves to consider:
1. Review Your Income and Deductions
Now is the time to assess your projected income and deductible expenses. Deferring income to next year or accelerating deductions this year can help you stay in a lower tax bracket. Our team can model different scenarios to find your optimal strategy.
2. Maximize Retirement Contributions
Contributing to tax-advantaged retirement accounts—such as a 401(k), IRA, or SEP IRA—can lower your taxable income while building long-term savings. Don’t miss the December 31 deadline for contributions.
3. Take Advantage of Section 179 and Bonus Depreciation
Businesses purchasing equipment or software can often deduct the full cost in the year of purchase. Reviewing capital expenditures before year-end can uncover valuable deductions.
4. Harvest Investment Losses
If you’ve experienced investment losses, consider selling underperforming assets to offset capital gains. This “tax-loss harvesting” strategy can help reduce your overall tax burden.
5. Organize Records for a Smooth Filing Season
Good documentation is key to stress-free tax preparation. Ensure receipts, invoices, and payroll records are organized and backed up digitally.