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Ah, fall! The air turns crisp, leaves scatter the ground, and there’s an unmistakable sense that the year is winding down. Everyone's a summer person until fall hits. For many people, fall is a time for cozy sweaters and pumpkin spice. For entrepreneurs, freelancers, and the self-employed, it means something different: the final stretch of the tax year.
While you might be tempted to coast through the last few months of the year, now is the time to sharpen your focus. The decisions you make today will dictate how much of your hard-earned money stays in your pocket come tax season. So, pour yourself a cup of coffee and let’s dive into how you can maximize your deductions before the year ends.
As the leaves fall, so should your taxable income. For those of us who spend hours driving to client meetings, running errands for our business, or delivering goods, your vehicle is a goldmine of deductions. With the IRS standard mileage rate at 67 cents per mile in 2024, those miles add up fast!
Why It Matters Now
Think about all the miles you’ve racked up this year. Are they all logged? If not, you could be leaving hundreds, or even thousands, of dollars on the table. The beauty of the mileage deduction is that it’s easy money if you’ve tracked your trips. But scrambling to organize a year’s worth of mileage at the last minute? That’s stressful. Now is the time to ensure you’re capturing every single mile.
Pro Tip
Review your mileage regularly throughout the year, especially now, to avoid a year-end scramble. We recommend using a mileage tracking app, like Everlance. (Shocker). With Everlance, mileage tracking happens automatically. No more manual logging or end-of-year panic to piece together where you drove and when. Everlance runs in the background, tracking every mile so that when tax season comes, you’ll be ready.
Need that new laptop? Bought software to streamline your workflow? These purchases aren’t just investments in your business, they’re also tax-deductible. Whether it’s office supplies or expensive equipment, you can deduct these expenses and lighten your tax burden. The government doesn't tax your gross income, they tax your net income (earnings - expenses = net income).
Why It Matters Now
Many people wait until the last minute to think about business purchases, but here’s the not-so-secret, secret. Buying now ensures you can take advantage of this year’s tax benefits. Investing in essential equipment before December 31st means a lower taxable income. So, if you’ve been on the fence about buying that new work tool, now’s the time to act.
Two pro tips on this one
Pro Tip 1: Before making any big purchases, forecast your business profits for the year to get a clear picture of your expected tax liability. If profits are high, investing in business equipment before year-end can reduce your taxable income, helping you save on taxes. If your profits are low, an investment may bring you to break-even, or even a loss that you can potentially carry forward.
Pro Tip 2: Take advantage of the Section 179 deduction to fully deduct qualifying equipment purchases in the year you buy them, rather than depreciating the cost over time. This gives you a bigger tax break now, just be sure to make the purchase before December 31st to count it for this tax year.
As the days get shorter, the hours spent in your home office get longer. If you use a portion of your home exclusively for business, you’re entitled to some very nice deductions. The IRS lets you deduct a portion of your rent, mortgage, utilities, and internet costs. This applies to a cozy corner of your apartment or a whole room dedicated to your hustle.
Why It Matters Now
With year-end around the corner, now’s the time to get your home office in order. Gather your utility bills, rent statements, and other expenses. The more organized you are, the easier it will be to claim this deduction come tax time. Also, maximizing this deduction reduces your taxable income. That's a win!
Pro Tip
Use the IRS simplified home office deduction ($5 per sq. ft. up to 300 sq. ft.) if you don't want to calculate actual expenses. It's quick and easy. If you prefer to use actual expenses, we recommend keeping receipts digitally. Seek out an expense tracker that allows a card sync with receipt uploading and note taking capability ...........we know a guy.
In business, timing is everything. If you’ve had a stellar year and expect to be in a lower tax bracket next year, deferring income can be a smart strategy. If you delay income until January, you can lower this year's taxable income. You might save big on taxes.
Why It Matters Now
If you’ve got a big client payment coming in December, consider pushing it to January. This lowers your taxable income for the current year, potentially dropping you into a lower tax bracket and reducing your overall tax liability.
Pro Tip
This strategy isn’t just about delaying payments, it’s about strategically managing your cash flow to minimize taxes. Talk to your clients early about invoicing flexibility!
As the year winds down, don’t forget about your future. Contributing to a self-employed retirement account like a SEP-IRA or Solo 401(k) doesn’t just prepare you for retirement, it also lowers your taxable income for the year. Win-win, right?
Why It Matters Now
Time is running out to contribute for the 2024 tax year. The more you contribute, the lower your taxable income, which can save you big bucks. And let’s face it, there’s no better feeling than knowing you’re both saving for your future and cutting your tax bill.
Pro Tip
Don’t wait until the last minute, calculate your maximum allowable contribution now to make the most of your tax savings. Even if you’re short on cash at the moment, many plans allow contributions up until the tax filing deadline, giving you extra time to reduce your 2024 taxable income while securing your future.
A cluttered desk means a cluttered mind, and come tax season, clutter means chaos. Start organizing your records now, from mileage logs to business receipts, so when tax time rolls around, you’re not left scrambling.
Why It Matters Now
The sooner you get organized, the smoother your tax season will be. Set yourself up for success by organizing all your receipts, invoices, and financial documents before the end of the year. Don’t leave this for April!
Pro Tip
Use Everlance to automatically organize your mileage, receipts, and business expenses throughout the year. With everything neatly stored in one place, you’ll avoid the year-end scramble and be ready to file your taxes stress-free. Plus, Everlance generates IRS-compliant reports with just a few clicks, saving you time when it matters most.
As the year comes to a close, now is the perfect time to take proactive steps to reduce your taxable income and maximize your deductions. Whether it’s tracking your mileage, investing in business equipment, or making retirement contributions, the actions you take today will set you up for success come tax season.
By staying organized, planning ahead, and leveraging tools like Everlance, you’ll not only simplify the tax process but also keep more of your hard-earned money in your pocket. Don’t wait until the last minute: start reviewing your finances now and make the most of the opportunities available to you. After all, every deduction counts!
Brad Thibeau is the Head of Growth & Partnerships at Everlance. Brad has worked at Everlance since 2021 with a focus on helping self employed people save time and money on their taxes.
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