With the second half of 2024 underway, now is a great time to focus on the thing no one likes to talk about but can make a huge difference to your bottom line: taxes…
Move No. 1: Supercharge Your Retirement Accounts
In 2024, you can stuff up to $23,000 into your 401(k), or $30,500 if you’re 50 or older. Got a SIMPLE IRA? You can contribute up to $16,000, with an extra $3,500 if you’re in the half-century club. So now is a good time to increase those contributions if you’re off track this year.
Since you’re a self-employed business owner, you can supercharge your retirement savings with a SEP IRA or Solo 401(k). These accounts allow you to contribute up to 25% of your net earnings from self-employment, up to a maximum of $69,000. That’s right, you could potentially shelter almost 70 grand from taxes – and it’s totally legal.
Also don’t forget that compound interest is your friend, so start maxing out those contributions now.
Move No. 2: Shop ‘Til You Drop (for Business Stuff, Of Course)
You can deduct up to $1,200,000 in 2024 for qualifying equipment, software, or your next new vehicle. If you’ve been eyeing that new 3D printer, high-tech coffee maker, or a fleet of company Sprinter Vans, now’s the time to break out the company credit card. Just make sure it’s actually for your business.
Additionally, don’t forget about bonus depreciation. In 2024, you can deduct 60% of the cost of qualified property in the year you put it in service. These deductions can be a game-changer for your business’s tax bill. It’s like the government is giving you a “buy now, save later” coupon, except “later” is actually “right now” – well, whenever you file your taxes.
Move No. 3: Turn Your Home Office Into a Tax Haven
As a business owner, you get to take advantage of the home office deduction. You have two options: the simplified method or the regular method. The simplified method lets you deduct $5 per square foot, up to 300 square feet. The regular method involves calculating actual expenses, which is perfect for those who enjoy spreadsheets.
Remember, your office needs to be used exclusively for business.
Here’s a little-known secret: if you’re self-employed and use your cell phone and internet for business, you can deduct a portion of those expenses too.
Move No. 4: Become a Charitable Giving Ninja
You can support your favorite causes and save money at the same time. In 2024, you can generally deduct up to 60% of your adjusted gross income for cash donations. And you can “bunch” your donations. This means concentrating several years’ worth of giving into one year to exceed the standard deduction.
If you’re over 70½, you can make qualified charitable distributions (QCDs) directly from your IRA. These count towards your required minimum distributions but don’t increase your taxable income. If you’re feeling really fancy, consider setting up a donor-advised fund. It’s perfect for those who want to be philanthropic but also like to keep their options open.
Move No. 5: Wine and Dine for Uncle Sam
You can deduct 50% of your business meals, but the IRS expects you to record the amount, date, place, business purpose, and business relationship of the person you dined with.
If you provide meals to your employees at work for your convenience (like during a late-night crunch session), those are 100% deductible.
These 5 tax strategies should give you enough to chew on until next week when you’ll learn 5 more moves you can make this year. In the meantime, if you’re looking to get specific guidance for your business, book a call with us.
The Trusted Advisor Your Business Needs
Together, we’ll ensure your business is well-equipped to take advantage of these tax-saving opportunities. With our support, you can focus on what you do best—growing your business.
AB Law, PLLC is a full-service business law and estate planning firm that serves clients throughout Texas. All consultations are free and no question is too silly, ridiculous, or complex. https://calendly.com/ablawpllc www.ab-firm.com