Last-Minute Year-End Business Tax Deduction Strategies for 2024

This article is designed to help you reduce your tax burden by maximizing deductions before the end of 2024. While it’s unlikely that the IRS will directly hand you a refund, in most cases, these strategies will help lower your tax bill and potentially result in future savings.

Here are six effective tax strategies you can easily implement by the end of 2024:

1. Prepay Expenses Using IRS Safe Harbor Rules
The IRS offers a “safe harbor” rule that allows cash-basis taxpayers to prepay qualifying expenses up to 12 months in advance. This means you can deduct expenses for the coming year, such as rent, insurance premiums, and lease payments for business property, all in the current year. However, the prepayments must not extend into 2026.
For example, if you pay $3,000 a month in rent, you can prepay $36,000 on December 31, 2024, for your 2025 rent. You can claim the full deduction in 2024, while your landlord will report the payment as income in 2025. Be sure to mail the check using a trackable method, like USPS priority mail, to prove the timing of your payment. Also, remember that you should not report this prepayment on a 1099 form for the landlord.

2. Postpone Billing Customers, Clients, and Patients
To reduce your taxable income for 2024, consider delaying billing your customers or clients until after December 31. By doing so, the income won’t be reported in 2024, giving you a lower taxable income for the year.
For example, a dentist who typically bills patients at the end of each week could delay all December billing until January 2025, effectively pushing the income into the next tax year.

3.Invest in Office Equipment
Purchases of new or used business property—such as office furniture, equipment, or machinery—may qualify for Section 179 expensing or bonus depreciation. This allows you to deduct up to 100% of the cost for qualifying items in the current year. For larger items that don’t qualify for Section 179, you can benefit from bonus depreciation (60% in 2024), plus additional depreciation over time.
Remember that the Section 199A deduction may be reduced by higher business expenses, so consider the impact of major purchases on this benefit.

4. Maximize Credit Card Deductions
As a sole proprietor or business owner filing Schedule C, you can deduct expenses the moment you charge them to your business or personal credit card. If you operate as a corporation and have a corporate credit card, the same rule applies. However, if you use your personal credit card, your corporation must reimburse you before the year ends to qualify for the deduction.

5. Claim All Your Deductions
It’s important to claim every legitimate deduction available, especially if your business expenses exceed your income, potentially resulting in a tax loss (a net operating loss or NOL). If you’re a new business owner, don’t overlook deductions that could reduce your taxable income. Carrying forward an NOL to future years can result in tax savings later.

6. Take Advantage of Qualified Improvement Property (QIP) Deductions
If you made improvements to the interior of a non-residential building in 2024, those expenses might qualify for accelerated deductions under Section 179 or bonus depreciation. To qualify for the 2024 deduction, you must place the improvement in service before December 31, 2024. This includes office buildings, retail stores, and shopping centers.

Key Takeaways
Business deductions are essential for reducing your tax liability. By prepaying expenses, delaying income, investing in equipment, and utilizing credit card purchases, you can lower your 2024 taxes. Remember to track your expenses carefully, ensure timely reporting, and claim all deductions, even if they seem excessive. These actions can lead to a more favorable tax situation this year, and potentially a tax loss that can carry over into future years.

Make sure to place any Qualified Improvement Property into service by December 31, 2024, to qualify for deductions in the current tax year.