Year End Tax Planning Basics

Two weeks ago, we did our first open Q&A session, as we called it, Ask A CPA with JT (watch the recording here). We did some year end tax planning basics plus a Q&A and right on queue, someone asked about year-end business purchases for tax deductions.

Perfect question. And yes, absolutely. Bringing 2025 business expenses forward into this year, December 2024 makes sense if you have the cash and a tax problem.

Here's what I mean... we have a client who asked us about buying a new car before the end of the year. Does he have a the cash in the bank and a tax problem to bring down? Yes.

And so we asked what he would do with his current car... I mean, I love me a Mustang as well, but do you really need two cars as a single man?

And when he asked, he said he was gonna sell his current one and still only have one. Phew!!!

Why did I breath a sigh of relief?...we see this every year... people buying stuff just for tax purposes because they saw a tik tok video. But not our clients ;)

The lesson that our client with the Mustang... I mean, I made it up and he has a Bug like Ferbie.... the lesson he already knows after working with us for like a year now... don't let the tax tail wag the dog. 

Why? Simple math: Spending 100k to save 30,000 in taxes still means you're spending 100k on something you don't need. And with a car in particular, being stuck with a depreciable "asset" and a monthly payment that you don't need.

Better approach? Look at what your business truly needs for 2025. If you're going to need it anyway, then yeah, buying in December vs January can make sense. But don't let the tax tail wag the business dog and just buy stuff because of taxes.

Like our client NOT named Nathan with NOT a mustang and soon to NOT be an Infiniti NOT in Austin, Texas.... the moral of the story today, yes, absolutely purchasing 2025 business things now in 2024 can help bring your taxes down. Yes that is true.

And the time to do it is when you actually need the item, plus you have the cash to do it, plus you have a tax problem to mitigate. 

Hopefully that makes sense. And hopefully you got some 2025 expenses that you can pay for now to help bring your taxes down. 

Plus, to watch a recording of our Q&A session that was 80 minutes long... Yeah, I can't believe people spent an hour and a half of their free time with us tax advisors either haha

Watch the Q&A with JT here for some year end tax planning basics, plus tax questions answered. https://www.youtube.com/watch?v=SsKl6zmPa4g