Finance

Holiday-Season Tax Trimming

Lower your tax bill with last-minute adjustments.
Magazine Contributor
Owner of Make a Living Writing
2 min read

This story appears in the December 2006 issue of Entrepreneur. Subscribe »

It's hard to think about taxes when the holidays are near. But now is a great time to make some final moves to cut your 2006 tax bill. To save the most money, look at how your business fared this year and then estimate revenue for next year, advises Joe Kristan, tax technical director at accounting firm Roth & Company PC in Des Moines, Iowa. Your best year-end tax maneuvers will be different if this year was an unusually good one, or if you're expecting sales to jump next year.

If revenue will rise next year, postpone paying expenses until January--you'll need the write-offs more next year. Pull in any revenue you can collect this year.

If you envision a slump next year, now's the time to defer income into 2007 and prepay as many expenses as you can. Make equipment purchases, or prepay fees now. Revalue, sell off or donate obsolete merchandise for an inventory write-off.

A final tip: If you are close to a tax bracket's income limit, redouble efforts to reduce gross income. Donate to charity or contribute to a retirement plan, for instance. Cutting a few thousand dollars of taxable income can bring substantial relief. For example, if you're married and have taxable income of $193,000, the first $188,450 will be taxed at 28 percent. But that last $4,550 is taxed at 33 percent--that alone is a $1,500 tax bill.

Seattle writer Carol Tice reports on business and finance for The Seattle Times, Seattle Magazine and other leading publications.

More from Entrepreneur

Dustin's experience and expertise can help you monetize your message, build a marketing strategy and connect with influencers.
Book Your Session

For a limited time only, get this bundle of Entrepreneur PressĀ® titles for less than $30 (60% OFF) on our bookstore when you use "LEAP" at checkout.
Buy Now

Are paying too much for business insurance? Do you have critical gaps in your coverage? Trust Entrepreneur to help you find out.
Get Your Quote Now

Latest on Entrepreneur

My Queue

There are no Videos in your queue.

Click on the Add to next to any video to save to your queue.

There are no Articles in your queue.

Click on the Add to next to any article to save to your queue.

There are no Podcasts in your queue.

Click on the Add to next to any podcast episode to save to your queue.

You're not following any authors.

Click the Follow button on any author page to keep up with the latest content from your favorite authors.