Expense Acceleration

What it is:

Increasing your business expenses by purchasing goods or prepaying normal operating costs can be a huge tax help. These can be simple expenses like paper or office supplies to more complex items like cars, trucks and buildings. While it may seem obvious, most business owners are so busy at the end of the year they forget to think about what items they could buy now.

Keep in mind, any increase in spending must be made before December 31 or the end of your fiscal year. Some common expenses business owners accelerate are:

Automobile payments

Office supplies

Payments to vendors

Software renewals

Commissions

Benefit Payments

Advertising Costs

Ratings

Increasing expenses must be used cautiously. Never spend money JUST to get a tax deduction, you should only spend money when doing so will later make you money, or buy an item you need to make money.

Also, keep in mind not everything can be expensed all at once. Check with our office to find out what can be deducted if you are not sure.

Strategy Overall Benefit

Small Benefit

Large Benefit

Audit Risk

Audit Unlikely

Audit Possible

Difficulty Rating

Easy Setup

Difficult Setup

Aggressiveness Rating

Low

High

Strategy Tax Saving Options

Option A

Increase Expenses By

$44,558.99

And Save

$16,508.88

Option B

Increase Expenses By

$66,838.48

And Save

$23,252.89

Option C

Increase Expenses By

$111,397.47

And Save

$33,758.22

Must be implemented before Dec. 31st of the tax year

Traditional & Roth IRA Planner

What it is:

Choosing between a Roth IRA and Traditional IRA depends on income level and financial goals.

Traditional IRA

Increasing expenses must be used cautiously. Never spend money JUST to get a tax deduction, you should only spend money when doing so will later make you money, or buy an item you need to make money.

Key Difference: A traditional IRA allows you to make pretax contributions. This allows you to take advantage of tax
benefits today.

Taxes

Contributions grow:

Tax deferred

Tax-deductibility:

Yes, gives immediate tax
benefits

Contributions

Contributions come from:

Pre- or after-tax dollars

Max Contribution for 2022:

$6000 ($7K if over 50)

Withdrawals

Penalties:

Penalty free but taxes at
current income after age 59 1/2

Mandatory Distributions:

After age 72

Strategy Tax Saving Options

Tax Payer Wages:

$29,700

Current Contributions:

$29,700

Spouse Wages:

$29,700

Current Contributions:

$0

Contribute

$2,000

And Save

$740

Contribute

$4,000

And Save

$1,480

Contribute

$6,000

And Save

$2,220