Bonus depreciation is a tax incentive that the IRS implemented several years ago to stimulate the economy. For several years, it allowed business owners to completely write off the cost of new equipment 100% in year one instead of depreciating the equipment over 5 or 7 years like in the past.

In case you’re new here (haha this is my first newsletter) and don’t have a great understanding of taxes, a “write off” is essentially a business expense that lowers the amount of profit a business makes, which leads to less profits being taxed, which leads to a lower tax bill, which leads to more money in your pocket, which leads to being closer to having a private jet, etc… I think you get it.

Unfortunately, the IRS must have seen too many influencers writing off the full cost of G Wagons to lower their tax bill and decided, “enough is enough, time to get rid of bonus depreciation”. So yes, bonus depreciation is going away (and is already on it’s way out the door). 2023 was the first year where only 80% of the cost of the equipment could be written off in the year of purchase, and it reduces further in 2024 to just 60%. It will be fully scaled out on that same pace by 2027.

So what does this mean for you? In case you can’t put 2 and 2 together, this means that you just have about 3 weeks left to claim 80% bonus depreciation in 2023 to lower your taxable income significantly! Whether that’s a new business vehicle, heavy equipment, or a cost segregated portion of a short term rental, you should act now before it’s too late.

Let me know if you have any specific questions on what qualifies.

In case you didn’t notice, it is the last month of the year

Last month to record business expenses

Last month to contribute to certain retirement savings plans

2023 Q4 Quarterly Tax Payments are Due Jan 16, 2024

Payroll Compliance Reports with a Due Date of Jan 31, 2024

W2s (Employee payroll)

940s (FUTA report)

941s (Quarterly employee withholdings)

Tax Strategy is my favorite thing to do. I’ve had a few clients take me up on a 2023 tax projection and a full 2024 strategy plan to implement. Here is the story of one of the tax plans we did:

-Graphic designer in FL
-Engaged to be married
-50% ownership in an agency (doing about $140k in net profit)
-Freelance work (about $80k) on the side of that. The opportunity to change from freelance contractor to a full time employee of that company.
-Purchasing first rental property in late December
-Needs to find the best way to reduce tax liability in 2023, but primarily to have a plan for taxes/business structure in 2023

It’s always important to take in all the factors listed above but even ask about some of the small factors in case there’s any wildcards that don’t initially meet the eye. I use a tax software called Tax Planner Pro where I can run dozens of scenarios to see where you get the most bang for your buck on tax strategy. Some things are just life related too where it just helps to have a third party’s view/insight on the situation. Here’s what we decided:

-Take the job to convert the freelance work to full-time employment because it comes with a large raise and will basically max out SS tax liability. This means they won’t have to pay any SS tax on her self employment income.
-With that, there is really no benefit to have the partnership taxed as an S-Corp since very little Self Employment tax will be collected after maxing out SS tax.
-For retirement accounts, max the full $22.5k at new job and then move to SEP IRA with additional partnership funds
-Get married ASAP! The fiancé currently is building a startup and has little income; getting married in 2023 would lower her tax liability by over $8k

If you’re interested in a tax plan, click here to learn more or reach out directly. See below a look at TPP and part of my report.

The last year of growing my tax practice has been a fun journey. I started out just by reaching out to a few friends with small business during tax time last year to see if they could be my test subjects (shoutout to those of you that said yes).

From there, I worked to venture out with referrals and local marketing mostly through Facebook. I was met with a lot of solid interest and a lot of failed attempts at selling my services. They were all reps in my mind though and nothing was wasted.

Around that time, my girlfriend told me I needed to get on UpWork. I was skeptical and basically just made the account to not dismiss the suggestion. This was the best thing I could have done. I quickly learned that the platform was full of people who had successful businesses and were overly happy to pay for a service that could help them save more than they were paying (go figure).

Since then, I’ve focused much of my attention to UpWork and growing my profile, reviews, and experience there. I still have love for my local markets and will keep it that way, but UpWork has been significant to say the least.

I’ve been able to offer my time and get paid for something as simple of a 30 minute consultation to just answer some tax questions. It’s very rewarding to know that I’ve learned enough to have my knowledge be worth any amount of value at all. I am truly thankful for each and every client I have and the trust they’ve put in me.

Due to the large market here, I’ve been able to specialize my offerings a bit more. I am now highly focused on client acquisition through first building a tax plan for them. This allows me to get a full breakdown of their business and tax situation right off the bat. I can provide extreme value in a tax plan while also prospecting if this would be a good business to work with in the future for tax prep, bookkeeping, advisory, etc.

Again, just wanted to share a bit about the growth of what I am doing and will continue to share updates.

If you’re here, it means you are one of my clients from my inaugural year 2023 and I truly appreciate you for your business and putting your trust in me. I also hope you don’t mind that I added your name to my mailing list— if you’re not interested, it will only hurt my feelings a little bit if you unsubscribe 😅 

With that being said, if you’re still here (or just scrolled down to see this), I’d like to give you all who were part of the initial list a free $25 Starbucks or Amazon gift card just for being part of my year. Simply fill out of the form linked here with your email and the type of card you’d like to receive via email.

My only ask is that if you have not yet reviewed my business but are willing, that you could please review my google business page here to help me continue to grow my business.

And if you have any friends that might benefit from this newsletter for a little more tax strategy in their lives, feel free to pass it along.