Top 20 Year End Tax Strategies Everyone Should Know

These are deadlines and strategies that if you do not employ before 1231, you

are SOL every $10,000 that you pay yourself in profit instead of salary, that's a fifteen hundred dollar tax savings.

And if you made more than fifty grand this year profit, you're going to want to consider this anything you know you're going to buy in January, pull the trigger on December 31, get the write off. Now it's about making a good economic decision then grabbing the best tax write

off and you can invest that money however you want.

Welcome everybody to the Main Street Business podcast and could be the most powerful cost saving wealth building podcast you've listened to all year. Because we're talking about our top 20 tax strategies and deadlines that you need to know about to save money and make money. Matt, I would you think, Matt, was that a great intro? I don't know.

Can you actually, I mean this could be the most powerful podcast you've ever listened to in your life because this is about saving money on taxes and there's a lot of things you need to know about by year end. And we get all these questions from our clients and our law firm at KQS Lawyers about what they can or can't do. What matters to me, we're going to hit them fast and furious with you here. We're going to hit 20. Now maybe eight of these make sense for you. You might not be hitting all 20 of them, maybe three or four, but we want to hit them. So you know what matters. And keep in mind, we do have a webinar at KQS Lawyers on this. So get over to kkoslawyers.com where you can sign up for the webinar. This is, it's going to go far more detail in this, but I'm excited. I don't know if you want to be leadoff hitter Mark or if you want to defer.

Yeah, I'll go head off. I want to say one other thing. We're going to, as Matt said, go quickly through this November 19th you can get over to kqslawyers.com you'll see it in the show notes to sign up for the free webinar where we have 8 to 10 of our attorneys going through these more in depth and answering questions in a one to one hour to an hour and a half webinar. Not sure where that is going to be yet. It's going to be a big one. So plan on the more in depth webinar to get more questions answered. Have A pen and paper handy. Have your note app on your phone open. Be ready to call your accountant, your tax advisor, and if you don't have one, we can get you one over at the Main Street Tax Advisor network. It's going to also be in the show Notes where we have trained over a ousand accountants nationwide, CPAs, enrolled agents and others where you can find a new tax strategies if you need one. So everybody buckle up. These are deadlines and strategies that if you do not employ before 1231, you are SOL and I'm not talking statute of limitations. Matt, number one.

All right, retroactive s election on your LLC. This is for any of you operating small business owners. You've made more than 50 grand a year. After all your expenses, you might want to think about doing an S election to your llc. That means you're going to be taxed like an S corporation. There's a strategy there we've talked about. I have other podcasts about it. You want to save on self employment tax. This will save you on self employment tax even if you were just an LLC all year. Now, if you never had an LLC or you were a sole prop, this doesn't work. But for those that started, it's just an llc, you're starting to make money. Consider the retroactive selection. Excuse me? Consider the retroactive selection.

Yeah. And if you made more than 50 grand this year profit, you're going to want to consider this. The election, in all honesty, could be done after 1212 31, but you don't want to wait till after because your payroll has to be done before 12:31 and you got to nail that. So they go hand in hand with number two. For any of you out there that are s corporations already or took advantage of point number one, making a retroactive S election to 1125, you've got to nail your payroll. Now, this is where many, many accountants are far too conservative. Matt and I teach continuing education on the reasonable comp issue. Do not let your accountant freak you out and say, oh my gosh, you're going to get audited. If you don't take enough payroll and they take far more in FICA wages than is reasonable and you end up paying way too much in taxes. People, you are the captain of your ship. This is your tax return. So number two, reevaluate your payroll level and if your account is too conservative, get rid of them. I'm not kidding. In 25 years, we've never had a client audited for taking too low and reasonable comp. We teach on this, we write on this, we read every case on this. Trust me, your accountant could be way, way too conservative. That's number two. Anything you want to add to that, Matt, or take us through?

Yeah, I'll just say, just keep in mind every $10,000 that you pay yourself in profit instead of salary, that's a $1,500 tax savings. So that's a pretty big deal. You can't pay yourself all profit or dividend coming out of that. You do have to take a reasonable salary, but that's the strategy there. That's what the tax saving in. It's on the self employment tax and pushing. Instead of taking all self employment income, what you're doing is a sole prop. We can take some in salary, some in profit. That's where your tax savings are at. All right, Number three, for any of you that started a business this year and you've been hustling, but you just haven't made any money yet and you've got some expenses build up, you need to make a sale. You need to make a sale so you can unlock those expenses and they can help you on your tax return in 2025. If you don't make a sale, those expenses are gonna have to carry forward into next year. So consider getting out there, getting there. That first customer, you don't have to have it perfect. Get that first customer, get some revenue in the door.

Can I just say the word base hit, for crying out loud. Many of you may be in a real estate industry concept where you're like looking for that first big deal. Guys just go out and screw up someone's kitchen remodel in December. You've had, yeah, you've done it. Make a sale. So common conversation we have. You can look at prior podcasts on this. The startup mode is wonderful. You could be grabbing expenses all year in 2025. But if you don't sell that first cup of lemonade, all you have is a lemonade stand that's not in business. So get on it. Number four, hold your board meeting during the holidays and take a write off for travel, dining and maybe even the Augusta rule renting out your home to your business to hold this special board meeting. You might be traveling at Thanksgiving or Christmas. And people, and this is so important, we've been teaching this over and over and over again. If you're an LLC or a corporation, you should all be holding a board of advisors or board of directors meeting. And if you're like, I've never heard of this or I have an llc. That's because you probably set it up online or not with us, a real law firm. So you need to get your LLC board meeting held. It's going to give you better asset protection. You can take a tax write off. It's going to bring your family together. You can get your family involved. You could even justify payments to family members on for compensation. So super important, Matt, I know you already got your schedule too.

Oh yeah, yeah. I'm planning on mine here. We're going to be doing it on the road, Northern California. So it'll be exciting. Number five, health savings account. Consider that we love a health savings account, but there's a qualifying thing about the health savings account needs to happen by year end. Actually by December 1st, that is you need a qualifying high deductible plan. It's open enrollment right now. You might be switching plans. Maybe you're self employed, you've had a job change or a spouse job change. This is a time consider getting a qualifying plan or if you already have one, making sure you're taking advantage of the HSA. Now the HSA contribution isn't until April 15th. Okay, but we're talking, you know, about 4,000 individual, 8,000 plus for a family that you can put in there, get a tax deduction, invest the money, it grows tax free and it comes out tax free for your qualifying medical. It's a triple tax benefit. We want to make sure we're using the HSA where we can so. But right now it's timely because you must have a qualifying plan that is open enrollment. You can go get one, you can switch to a qualifying plan so that you can do an HSA and get on on the HSA party.

And I cannot emphasize enough, the HSA topic is incredible. One of the we met, I think top five tax strategies all nationwide. I mean this is so important for small business owners and non business owners. Look into it. We have a podcast in the last month where we dive deep into this for 45 minutes. Number six, dissolve or set up any entities you might have laying around. For example, an LLC that you set up two or three years ago and it's just still sitting on the shelf. You may be paying state fees, registered agent fees and maybe even some state taxes called the franchise tax in the state of California is just one example. All the states can have a different rule with this and it could be costing you clean house. Dissolve any of these entities before year end so that you're not carrying that cost into next year. And number two, any of you that are restructuring right now. Let's get any entities set up that you need by January 1st. So you're dial it in for next year's tax planning. This is a perfect time of year. Get a consult, set up with one of our tax lawyers for a comprehensive tax plan under two grand, with a real lawyer on the phone helping you around the country in any state. It's down in the show notes. Get her done. All right.

FSA flexible spending accounts, not a huge thing. We love the HSA and the HRA here, especially for our self employed clients, our investor clients, the fsa, though, if you do have a job that provides this flexible spending account, it is use it or lose it. And this is the time of year you may lose it if you don't use it. So the clock is ticking. A lot of those you have to use by year end. So we want to make sure that if you have that and that money is being allocated, you're getting the reimbursements in so that you are using it and taking advantage of that.

Now, this can be confusing. I want to make sure you understand this. Some companies have allowed for a reimbursement up until March 15, which they can do, but it has to be in their plan document. If it's not in the plan document, you only have until December 31st under IRS law. So find out at your employer if they let you roll into the new year, turning in any extra medical receipts. If they don't. Again, December 31st is your deadline, so don't assume you're going to have that extra time. Check with your company's plan so that

ER visit on New Year's Eve, I can still get reimbursed by March 15th. I'm still good. I don't have to, I don't have to rush in before New Year's Day. You know, before

I had a doctor, a friend, next door neighbor, and he was like, 4th of July and New Year's Eve is like, it's insane at the emergency room. So whatever.

Funny.

All right, number eight, this is huge. This is right up there with the health savings account and that is paying any other family members before year end. You can't just roll into January, February and say, oh, I paid my kids last year, or I paid my spouse or my grandkids or my parents. I paid them. And you want a tax write off because they're in a lower tax bracket. And this is an important strategy that must be legit. Let's have all of these important family members on your board of Advisors, board of directors that we just talked. If you're going to pay your kids under age 18 or over age 18, you can't just 1099 them in January, which you would never do to a kid under 18. But the list goes on and on. We have podcasts on this that go on for hours in these different realms. A whole podcast just on should you pay your spouse? So please look at this. You can't just manufacture this out of thin air in January. Super important.

Yeah. And just make sure everybody caught that. When you pay your kids from your business, you're taking an expense, reducing your taxable income tax. Your kid who's legitimately worked in your business is picking up income, they're under their standard deduction. They're not paying tax on it. This is an incredible strategy to be utilizing. I've used this with my kids who've worked in the business. Mark's used, a lot of our clients have used it. It's also a great family thing to get them involved in your business, help them learn, give them some job and some work to do. All right, solo 401k, number nine here. For any of you self employed people with no other employees, the number one retirement account strategy you should do, it is clear, is the Solo 401K. You can put 70 grand a year away if you want tax write offs at your end. Right now you want $70,000 deduction. You could do a solo K. Now, you'd have to have made that income, right? Okay. And I assume if you've made a lot of money, that's when you're definitely chasing that much in tax deductions. But that one strategy alone, that is ten times how much money you can put into an IRA because you can put seven grand that so we love the solo K. You can also do Roth dollars which give you tax benefits in the future because those grow and come out totally tax free. So solo K can be self directed. There's so much stuff with that. We've had thousands and thousands, if not tens of thousands of clients do a solo 401k, self employed, no other employees. That is your number one retirement account strategy, hands down.

And don't be deceived again thinking, oh, there was new laws passed that I can make the contribution next year in a solo. Yes, you can, but the contributions are limited. If you don't have it set up up by December 31st. So there's some special rules there. Learn about them now. Number 10, we're only halfway through people and we're saving you money by the second. Number 10 matching out or maxing out. For those of you that have a day job 401k or your spouse, you can also have a solo 401k on top of a day job 401k. You can have both. But for those of you that have the company group 401k, make sure you're deferring your maximum amount or at least enough to get the match. So we call that match and output enough to get the match. And if you can and want to do more and don't have a solo 401k, let's max it out. So be thinking about this and you've got until December 31st. Let's get that done. Love it.

All right, let's get to number 11. Buy a new vehicle or equipment before year end. This is a big one. This is the big beautiful bill that came back and gave us 100% bonus depreciation. This was kind of like your invitation to buy some equipment or maybe a new car you use or truck in the business. So this is that you've heard about it. This is that bonus depreciation. But you do need to acquire this asset before December 31st if you want it on your 2025 tax return.

On this note, be careful. It's the old adage that many of you have taught to your teenagers or your 21 year olds. Just because you can do it doesn't mean you should. So yes, you don't have to pay cash for this equipment or new vehicle, but it's a good economic choice. And also, do you have basis to take the write off for those in an S Corp Bonus depreciation can be a tricky thing. So talk to your tax advisor before you rush out and go into debt to buy a bunch of equipment or whatever, thinking you're going to depreciate the hell of it, you know, off the books. So be careful.

But I'll say this. If you're already in the mix on this in growth in the business, or you need the new truck for whatever your type of business you're in, or whatever the equipment may be, get it in before year end. Do that now. If you instead of in January or February or March or whatever you know that might otherwise be coming, because that'll help you save taxes now rather than later. And we always like saving taxes now rather than later.

Yeah, it's about making a good economic decision then grabbing the best tax write off.

Exactly.

Number 12, the salt workaround. Now this is a big one because it has to be done before December 31st. It's a strategy at about half of the states for any of you that are high income earners, 1 percenters that are going to phase out of the salt, the state and local tax deduction which has been raised to 40 grand, but it does phase out back to 10 based on your income. The strategy is letting your S corporation pay the state tax for you out of your corporation. And it's a way to take the write off when normally you're not allowed on your 1040. It's called the salt workaround. If you're making more than 500 grand and you live in a state with state tax, talk to your accountant. This is something that has to be done before year end to take advantage of.

Yeah. And this is going to happen of course in conjunction on your business returns to specific for business owners as well here. All right, number 13, shift income and expenses here. Now this is what we're talking about. We've talked about maybe buying that new equipment or vehicle. We want to get expenses in in year end and incur those expenses, particularly obviously your cash based taxpayer. We're going to be tracking that. And so if you have expenses, you have accounts payable, let's pay those bills, get the write off within that year. Also, maybe you have some income or services for clients that you're not delivering yet. You might pre invoice earlier or follow up on payment faster. Maybe let's hold off on that until after the first of the year so that you're capturing that income in 2026 and not in 2025. Now you can't play too crazy with this, but when we're in December in particular here, it's a good time to just think about that, particularly I think the last few weeks depending on the size of your business here, about making sure you're paid up on all your expenses and being a little more strategic about when you're receiving or chasing down income.

Yeah. And folks, let me give a quick example. Have you ever been to a Costco on December 31st? Holy crap. All the business owners are in there buying any equipment or supplies that they need before you're in at Costco. And it could also be stuff at the Apple store. It could be at Best Buy. Anything you know you're gonna buy in January, pull the trigger on December 31, get the write off. Now it's called the time value of money. Anybody that owes you money, if they're saying, hey, come pick up your check on December 30th, I'll pick it up on January 2nd. Thank you very much. Now we just push that income to the next year. That's what we're talking about. Number 14 is the HRA, or health reimbursement arrangement. This is the brother or sister, whatever you'd like to call it, to the health Savings Account. And these are super powerful. In a small business where you're trying to write off all of your medical expenses and you want to leave that HSA money alone and let it ride and you can afford to do it, then let's add an HRA to the mix. Or you can do it in conjunction with an hsa. Super powerful. We've talked about these on podcasts before, but the reimbursement has to happen before December 31st. I have a whole chapter in my book on this topic, the Tax and Legal Playbook. You can get it on Amazon and read it in 10 minutes. But talk to your accountant. If they haven't brought this up before and you've got medical expenses and you're a small business owner again, you may have the wrong accountant.

Yeah, and medical is one of those things that's very hard to write off. You may have tracked it before and tried to itemize it and be frustrated because you might have had large medical, but you never end up getting a deduction or write off for it. The HRA is the way if you are someone that has regularly medical or you've had large medical where you can't get 100% write off on that, you got to be a business owner to adopt this HRA plan. And, and I like how you put that mark doing it. Not instead of the HSA in addition to the hsa, because even if you have high medical, still do the hsa, it's a great tax deduction. We're saving. We're building that tax free bucket of money and also being strategic about the deductions because we're still incurring medical even if we are saving in the HSA and not paying it out. So great point. Okay, coming in at number 15 is the Roth conversion. This is the one that will not save you taxes this year. This will cost you taxes. All right, I hate to say it, but if you do this by December 31, 2025, this will cost you money. You will be sending the IRS money on taxes. But we want you to think about a few things. One, think about chunking to do the Roth conversion. Obviously we're doing the Roth conversion so we can grow that money. It's going to come out totally Tax free. But the downside is I got to pay tax when I convert. Well, maybe I can break that conversion up over multiple years. For example, I got $100,000 traditional IRA. I'd like that to be $100,000 Roth IRA. If I convert the whole hundred grand in 2025, I'm gonna have $100,000, 1099 R 100,000 of income on my 2025 return. If instead I did 50 grand in December 2025 and another 50 grand in January of 2026, I've broken that conversion up into two different years. Now that means in January, I've still got $100,000 Roth IRA. Go off, make some great investments, grow that tax free bucket of money. We could even stretch this out over multiple years. You could be doing 3, 4, 5, depending on how much you're trying to convert here. The trick here, and we've done videos and other stuff on this before, is a lot of the brackets in the tax code. You know, sometimes you'll jump from, let's say a 12% rate to the 22% rate. All right, there's a 10% jump, and then the next bracket might just be another 2%, but then there's another 8% bracket jump in the 20s to the high 30s into the 30s. And so we want to make sure we're not hitting that next bracket that jumps you up super high. And just being a little more strategic about the conversion because we love the Roth dollars, we just know it's costly, so we want to chunk it over time to hopefully stay in a lower tax bracket and also the manage the amount of money we got to send to the IRS now.

Yeah, this is such a great strategy. Five little words. Short term pain for long term gain. It's five words because I'm hyphenating short term and long term. Just want to point that out. So pay the tax now and never pay it again. But December 31st is your deadline to choose that money. Number 16, charitable contributions. A classic always out there. If you're going to give any money to your school, your church, your favorite charity, you can even do it on a credit card and it counts for 2025. So donating appreciated stock is included. If you have an IRA that you're required to take money out of because you're over age 72 and all those little rules that start to kick in, you could actually give that to charity. So a lot of things to think about here. If you're going to give money to charity, let's make sure we get it done before December 31st. Love it.

All right, number 17, buy a rental property. Now, there's a lot of options here and we're not going to do them all justice. But I want to hit one here that you might not have thought about and that is the self rental rule for any of you business owners where you own an operating business and maybe you're leasing from a landlord. Why don't you get your own building? This could even just be simply an office condo, standalone building, whatever it might be. Mark and I have done this. We own our own real estate. These are office condos that we then lease back to our companies. Why would I do that? Well, it's great because I'm building wealth and I'm paying myself rent. It's a great wealth building tool. But it's also a great tax strategy because the losses on the rental real estate under what's called the self rental rule, I can use to offset my business income. Usually don't get to mix those losses against your regular income. But you can do that under the self rental rule where it's the same ownership where you own the company that's operating business as well as the company that owns the real estate that is leasing the property to you.

And this is such an important strategy we could talk about for an hour again, which we have make sure you go into our prior shows is on rental property strategies before year end. It could be a short term rental, a long term rental if you're a real estate professional or this yourself rental if you're paying rent to someone else. And you may think how in the hell am I going to buy a rental property in the next 30, 45, 60 days? Well, there's a lot of strategies that might allow you to close before year end even though you may not start payments or transfer money until next year. This is where we love Pace Morby. Matt and I both speak at his conferences on a no money down strategy, finding distressed sellers that may be willing to sign a closing document before year end even though that you take actual occupancy next year or whatever the case may be. So get creative and see if this works for you. But it could be a massive tax write off and an incredible economic decision. Which brings US to number 18, the intangible drilling cost deduction. This is called the IDC. It's in the oil and gas industry. Very, very common, incredible strategy. And Matt, I did Hear Landman Season 2 is going to come out any day. I'm just standing by prime waiting for the show to come out. Love it. But anyway, if you like the oil and gas investment and you get into a working interest before year end, there will be some depreciation write offs. Now it's only in the last two months of the year you're making this investment. It won't be a massive write off. The bulk of it will be next year because it's based on when you enter into the oil and gas project. But it is still a write off. So think about it. If you're hot on oil and gas, it is a very, very common strategy and we love it. So be thinking about that before you're into.

All right, number 19, the 529 plan. If you've got kids you're trying to save for college, I want to give you a couple thoughts here. First, we love a Coverdell. You can put 2,000 a year into a Coverdell. You don't get a tax deduction but that money grows, is going to come out tax free for your kid for college or higher education costs. And, and you can invest that money however you want. You can self direct it, you can have it invested in crypto and real estate and other private assets. And that's why we love the covered out. But you can only put two grand a year in the 529. You can put 19 grand a year in there. If you're a married couple, you can do 38 grand a year in there. There's no federal tax deduction though for a 529. And it's invested in state funds that are dictated. You don't get a lot of choice and options in how that money's invested. But there is a state tax deduction in many states when you contribute to a 529. I know they have that here in Arizona where I'm at, where you actually get a state income tax deduction because you put money into a 529. Now if you're trying to get a lot more in though, I know there's some more advanced strategies to get more money in on this.

Yeah, there's this five year front loading strategy. Grandparents love it for their grandkids. The 529 can give you that state tax deduction depending on the state and, and which fund you contribute to. So just look at the rules. Again, we're not really excited about the 529 because you're limited to your investment options and the fees buried in these funds are extraordinary. We'd rather have you in a Coverdell or using a Roth IRA with your Kids too, to be building towards college. But it is a strategy. We need to mention it had to be in the top 20. So we've saved it pretty much close to the end. Which brings us to number 20, which is usually number one in any wall street publication, which is one of the most ridiculous in our opinion. And that is to take advantage of any capital losses and sell anything that you might have a loss in right now and harvest those losses, whatever. That is a strategy. But those losses are going to be only deductible against other investment income. They could be stuck in a bucket called a capital loss carry forward. Then you've got passive losses against passive income. It's just a very tricky area as well. So if you are going to sell any business interests, syndications, stocks, ETFs, crypto, make sure you're talking with your advisor to find out if it's actually going to help you at all and if it's a spark, a smart economic move to actually sell. So we put that number 20 at the end where again Forbes magazine is going to lead with that, which blows our mind.

Yeah, that would be like the only advice they would talk about or your financial advisor or whatever. And this still makes the list here. We put it towards the end, but this is the that tax loss harvesting. And just keep in mind here, right, like you bought stock for a hundred thousand and now it's worth 80 grand, right? You can sell that and lock in a twenty thousand dollar loss. Now it's bottled up there. You're not offsetting your W2 or your business income, but it could offset other stock gains or other investment gains. The one thing I want to note though, on crypto, which has gone down a little bit recently, maybe you bought some as it was going up, you could lock in some losses there. And there is no wash sale rule for crypto. So usually when you sell stock and you lock in a loss, there's a rule that says you can't rebuy that same stock. There's a time restriction on how long you have to wait because if you locked in the loss, they're like, we don't want you to just rebuy that same thing tomorrow, so you have to move into some other investment. But in crypto, the wash sale rule does not apply. So if you want to sell that Bitcoin, but you still love bitcoin and think it's going to go up, you can rebuy it right back and you've locked in that loss to use to offset other gains.

Phenomenal I love it. Great point at the end there, Matt and everyone, thank you for this lap around the track. 20 year end tax strategies that are legitimate, they're street smart strategies. There is so much here. I know every one of you can find at least one or two out of that 20 that will make a difference on your tax return in 2025. Literally. I can't imagine anyone that couldn't find something there because even my grandma that's 90 years old is going to donate to charity before you're in. That was one of the 20. So for crying out loud, get into these, talk about them with your tax advisor. Plenty of information down in the description. If you need some additional resources, come to our webinar on November 19th at KKOS lawyers.com where our lawyers we're going to go through these in detail and help answer questions as well. And and man, just a fun time of year for a tax advisor.

Yeah. And I'll just say this too is and get over our law firm. Kick yours. You need a comprehensive tax and business console. If you're like, I need to implement this personally, I don't need another webinar. I need to get this going on my own situation. That's what our law firm is doing with clients across the country. So you can book that@kqslawyers.com and get in to get a consult with one of our attorneys and get a specialized review of your last year's tax return. We go over an implementation plan with you as well for the strategies that make sense for you. So thank you everybody for being here and hanging in on this. We hope it was valuable to you. We know we're going to save you money on this if you go through these and take the time to implement them. And just know once you get that strategy down, you're pretty much doing the same thing next year. We run across so many clients that have had a decade, 10, 20, 30 years of crappy tax planning and we can't go back and change the past. But all the savings we can do if we can get this engineered right for this year, it looks a lot the same next year with some tweaking here and there. And that tax savings keeps saving you from here on out for many years to come.

So thanks again for listening. Please give us a five star, a ten star, two thumbs up, a high five, whatever you can. And please share this with your other friends and family members, your business advisors and your business associates. We're grateful to be a part of your life. The American dream is alive and well, and we'll see you next week for another episode of the Main Street Business Podcast. It.