Year-End Tax Planning for Long Island Individuals and Business Owners

Every January, small business owners across Nassau County, Suffolk County and the rest of New York face the same deadline: 1099s are due to contractors and the IRS by January 31Most of the moves that lower your tax bill have to be made before December 31. Once the year closes, your return can only report what already happened. Raymond G. Kenney CPA, P.C. meets with individuals and small business owners across Long Island and New York in the last months of the year to project their taxes and act while there is still time.

Why Year-End Planning Matters

A year-end review answers three questions: what you are likely to owe, what you can still change, and what you need to pay or set aside before the deadlines. It is also when you catch problems early, such as underpaid estimated taxes or a jump in income from a bonus, a home sale or an investment gain.

Year-End Moves for Individuals

• Retirement contributions. Maximize 401(k) deferrals before year end, and plan IRA and HSA contributions.

• Roth conversions. A lower-income year may be a good time to convert part of a traditional IRA.

• Charitable giving. Bunch donations into one year, give appreciated stock, or use a qualified charitable distribution if you are 70½ or older.

• Investment gains and losses. Harvest losses to offset gains, and watch wash-sale rules.

• Required minimum distributions. Take any RMD by December 31 to avoid penalties.

• Withholding and estimates. Adjust withholding or make a fourth-quarter estimated payment, due in mid-January, to avoid underpayment penalties.

• New York items. Review state withholding, 529 contributions and New York-specific deductions.

Year-End Moves for Small Business Owners

• Timing income and expenses. Cash-basis businesses may defer invoices or prepay certain expenses.

• Equipment purchases. Section 179 and bonus depreciation can allow a large first-year deduction for equipment placed in service by December 31.

• Owner salary. S-corp owners should confirm reasonable compensation before year end. See S-corp election.

• Retirement plans. Setting up a Solo 401(k) or SEP-IRA can create a deduction for the year.

• Qualified business income deduction. Planning around the §199A deduction can change how much of your income is taxed.

• Pass-through entity tax. New York's PTET election can work around the SALT deduction cap for eligible partnerships and S-corps. Ray reviews whether it fits and the election deadlines.

• Clean books. Accurate year-end numbers are needed to plan at all. See bookkeeping clean-up.

How a Year-End Review Works

1. Gather your numbers. Year-to-date pay stubs, business profit and loss, investment statements and last year's return.

2. Project your tax. Ray estimates your federal and New York liability for the year.

3. Model the options. You see the estimated savings from each move before you make it.

4. Act before December 31. You leave with a short list of steps and deadlines.

Want planning all year, not only in the fall? See year-round tax planning.

Serving Long Island and New York

Ray is based in Seaford, NY 11783, and works with individuals and businesses throughout Nassau and Suffolk counties, plus clients across New York and the U.S. through virtual CPA services.

Book Your Year-End Review Before December 31

Start with a free 10-minute Fit Check, or book a 30-minute ($75) or 1-hour ($150) consultation.

Or call 516-493-2967.