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  • Writer's pictureEvan Kirkpatrick

Baseline Year-End Tax Planning Considerations

tax planning conversation

As we get to the end of the year, I want to pass on a few thoughts that are broadly applicable for end-of-year tax planning.

1) Accelerate expenses before the year end. Most expenses paid by the end of the year will be able to be deducted on your 2023 tax return if your business is operating on a cash basis. Equipment and other assets that are placed in service by 12/31 will be eligible for depreciation, even if purchased using debt.

2) Delay revenue until after the New Year. If you wait to collect cash until 2024 starts, a cash basis taxpayer can delay the inclusion of that cash into income until next year. Please note that if you receive a check in the mail by the 31st, it is still technically 2023 income, even if you don't deposit it, or it doesn't clear, until January.

3) Cash out losses on securities. If you have stock positions that have gone down in value since you bought them, consider selling those positions to take the losses in 2023 to use to offset other capital gains from your brokerage accounts, real estate sales, or other sources. You do have to wait 30 days to rebuy those same or substantially similar securities, or you may not be eligible to take those losses.

4) Consider your overall income situation for 2023 versus 2024 and the future. If you are going to have a down year income wise, it could potentially make sense to do things before the end of the year to leverage your temporarily low tax bracket - such as converting retirement accounts to Roth status, taking extra retirement distributions, or selling appreciated stock positions.

But more than any of these, I encourage you to be proactive in reaching out to us. We want to help you make these end-of-year planning decisions in light of what is actually happening in your life in 2023. This is the time of year where we are best able to work with you on planning, tax projections, or any other tax issues - so don't be shy in reaching out to us!

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