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Our clients save on average $25,000.00 per year with this little-known strategy.
Here is a powerful business tax deduction strategy from a CPA near me that you can easily understand and implement before the end of 2021.
Prepay Expenses Using the IRS Safe Harbor:
IRS regulations contain a safe-harbor rule that allows cash-basis taxpayers to prepay and deduct qualifying expenses up to 12 months in advance.
Example. You pay $4,000 a month in rent and would like a $48,000 deduction this year. So on Friday, December 31, 2021, you mail a rent check for $48,000 to cover all of your 2022 rent. Your landlord does not receive the payment in the mail until Wednesday, January 5, 2022.
Here are the results:
- You deduct $48,000 in 2021 (the year you paid the money).
- The landlord reports a taxable income of $48,000 in 2022 (the year he received the money).
You get the deduction this year!
The landlord gets what he wants—next year’s entire rent in advance, eliminating any collection problems while keeping the rent taxable in the year he expects it to be taxable.
To learn about other powerful tax-saving strategies from a CPA near me, book your free tax assessment here.