Ep 453 | My Top 10 Tax Strategies to Implement Before Year-end

Thank you for joining me today. It's Brian Gubernick, and welcome to the No Days Off podcast, where we believe that every single day brings a new opportunity to get better. Today we are going to get better at managing our wealth, managing our finances, by focusing on my top 10 strategies that I believe you need to take advantage of or implement before the end of the year. We are very close to the end of the year, but there is still time to do a few things so that you mitigate your taxes for the year. Now, most of what I'm going to go through applies to entrepreneurs, those that own their own business. But if you don't own your own business just yet, some of this will still apply. So, so stick with us here. Okay, here's my top, my top 10 strategies, and these are in no particular order. I'm just going to give you 10 that I'm thinking about, and I just shared this list with my Metrics Masterminds group, and I know they all got a lot of value out of it. So let me share it with you today. By the way, real quick, episode— I think it was 419— we had a before-the-end-of-year tax strategy conversation with Tom Wheelwright that I talked about. So you may want to check out 419 as well. Because we are not going to cover those things that were in 419. So go check it out. Okay, number 1, if you want to lower your tax bill, minimize your tax liability, you need to accelerate your expenses and/or decelerate your revenue. What do I mean when I say that? If you've got expenses that are maybe 20— that, that you pay in, say, January 2025, if you're operating on a cash basis, which most of most of you listening probably are, try to pull those expenses, you know, forward, right? In that, in that we, we pay for them today and we take the expense hit today in tax year 2024 but get the benefit of that expense in 2025. If you're using an accrual method of accounting, it's different, but most people listening to the No Days Off podcast are using cash basis. So what can you pay for right now that you'd be paying for in January and February, and when you pay for it right now, you get the expense hit in 2024. Is there anything that you're going to pay for, uh, in 2025 that maybe if you pay a lump sum amount to that particular vendor, you could actually not only capture the expense in '24 but negotiate a discount? Now, on the other side of the coin, you have revenue, right? So I said accelerate your expenses. Is there an opportunity to decelerate Your revenue, again, if you were operating on a cash basis, is there revenue that you could potentially have coming in right now, you know, end of 2024, that instead of recognizing it in 2024, uh, maybe you, maybe you get the revenue or you receive the check, you make the deposit in '25. Again, this is— you need to be on the cash basis of accounting, but can you decelerate revenue? Again, you're pushing out income into the next tax year. So prepay 2025 expenses in 2024 or kick out certain revenue to 2025 if possible. Number 2, this will be a quick one. Make sure that you are maxing out your retirement contributions in your 401(k), your SEP, whatever it is you may have. This is something you're going to want to email or call your accountant and say, hey, is there every— is there any opportunity for me to max out retirement in any, any other way. You may find that you've underfunded certain things and you can take a greater, uh, expense by making a contribution in 2024. So make sure you max out your retirement contributions. Uh, I can't tell you enough how many times, uh, I can't tell you how many times I see people I'm coaching or working with that didn't max out retirement contributions, didn't realize there was more opportunity. Number 3, pay your kids. Pay your kids. Make sure your kids are on payroll. Now, of course, they have to be doing things for your business, but paying your kids creates an expense to that business, income to the kids, but you're likely paying them less than the standard deduction, which means they don't have to pay taxes on that income. So I'm not your accountant. You're going to want to ask how best to do this with with just a week left. But if you can pay your kids for work they've done in 2024 before the end of the year, you should do it. Side note, if you are able to pay them, make sure you route that money to their Roth IRA or, or another investment vehicle that's similar to that and max out that opportunity. Number 4, you've probably heard of the Augusta rule. Do you have this in order? Do you have this in order? Are you— do you have your Augusta rule, uh, calculated, documented? Make sure we get that in order right now. What is the Augusta rule? I know we've covered it here at No Days Off. You may want to go Google it, but bottom line, are you renting your home out to your business for your business to use that home for a meeting and, and something that you would— you'd be paying for a meeting space, you know, somewhere else? But now we're going to pay from the business to you to use your house. That's at a fair, fair rate, right? And as the person renting out the house, you don't actually have to pay income tax on that, yet the business still gets to capture an expense. A little bit more convoluted than what I just described. Ask your accountant. Number 5, quick one here. We talk about this all the time. If you have an opportunity to buy real estate before the end of the year, you should do it. And then you depreciate that, you cost segregate it. There's an opportunity there. Yes, if you have the money laying around, you can still get deals done before the end of the year. I'm buying a property in two, in two days, and I just put it under contract a week ago. So try to make it happen. Along these same lines, if you have to buy a vehicle, buy one that's over 6,000 pounds, and there's a benefit to doing that, greater depreciation. Not the amount it once was, but there's still a great benefit in doing it. Number 6, max out your HSA. If you have a health savings account, make sure you're maxing that out. If you don't have one yet, see if you can make it happen before the end of the year. Again, another one to bounce off your accountant, and it has to make sense for you and your family, but max out the HSA. Number 7, can you loss harvest? Okay, what is loss harvesting? There's a lot of different strategies around loss harvesting, but simply put, for sake of this conversation today, which is minimizing your tax liability in 2024, if you have some stocks that you're holding right now and those stocks are down, so you've, you've lost money on paper this year with those stocks, you can sell them now, recognize the loss in 2024, which will offset gain in 2024, thereby lowering your tax liability. And then 30 days after you sell, if you still like those stocks, you can buy, buy them again. You could buy them right back. Or if, if you want to just, you know, be in that same position or that same industry, you can sell the stock and buy a like stock immediately. So for example, uh, if your Delta stock is down, sell it. And if you like the airline industry, go buy Southwest or go buy American Airlines so you don't lose your position in the industry. Bottom line though, sell anything that's lost, create anything that's down on paper, create a loss, and, and that loss is going to offset gains. It's going to lower your tax liability. Number 8, I don't know why this one gets a bad rap. It shouldn't. It's red flag for, you know, people say it's red flag. It's not. Look at your home office deduction. So many people post-COVID are working from home but are likely not taking advantage of a home office deduction. You can take advantage of this if you are truly working at home, and there's— and it's not all that challenging to, to calculate it and to document it. Again, talk to your CPA. But for me, I, I do, uh, work from home quite a bit. As a matter of fact, if you're watching this on YouTube right now, you see me standing in my home office. And I know the square footage of this office. I know the percentage of my home that this office represents. I know my utility bills. There are lots of things that I— I mean, these, these variables that I have to use to calculate my home office deduction are right at my fingertips. It's not that hard. And I truly work from here every single day of the week. So there's an opportunity there. Number 9, it's a little late, but you may still be able to pull this off. Take a look at investing in mineral rights, natural gas, or something similar. There are some very unique tax benefits to buying into this, this asset class— mineral rights, natural gas. Uh, I would definitely dig into that if you have a couple dollars laying around. Can you invest in mineral rights, in natural gas, energy, these things? Again, ask the CPA. There are definitely places that you can still put money. Before the end of the year. Number 10 is the last one. It's going to be very unique to your city or your state. I want you— I want to make sure you ask your CPA if there are any tax credits for your local municipality or local state, tax credits you've not taken advantage of just yet. Uh, just a few weeks ago, I contributed, uh, $21,000 to, uh, to an education credit here in my home state. I get a dollar-for-dollar credit on that, right, which doesn't really make much of a— I mean, they're paying that in tax or paying it, uh, in this education credit to this, to this organization on the state level. I get a dollar-for-dollar credit, but I actually get a benefit at the federal level as well. So that $21,000 actually is an $8,000 deduction at the federal level, or tax savings, I'm sorry, at the federal level. 'cause it's a 21K deduction. So bottom line is, it's not so much what I'm doing here in Arizona, but are there tax credits that you could take advantage of in your state? Okay, I'm gonna wrap it up. Those were 10 strategies. There are more, but those are the 10 that come to mind for me that I thought I had to share with the No Days Off Nation, and you can run with them as well. I would bet you that at least one of those, you haven't fully taken advantage of. If that's the case, you owe me one, right? So when you save all these, all these dollars on taxes, make sure you recognize that the crew here at No Days Off turned you on to that opportunity. That's all I have for you today, the No Days Off podcast. Thank you so much for listening. And remember, every single day brings a new opportunity to get better. So let's get after it.