The end of the year is rapidly approaching and for the nurse practitioner entrepreneur or the nurse practitioner who has a high income, we all dread the upcoming tax bill…
We only have 10 weeks left before we can squeeze out as many deductions as we can! Once January 1st hits, then the numbers for 2021 are locked in and we are stuck with the income we have on paper at that point! For this reason, you need to ensure you have taken every deduction afforded to you!
Here is a quick list of ways to lower your taxable income for 2021:
- If you are sitting on a revenue surplus, then pay your practices lease in advance for 2022! I often will pay for the upcoming years lease at my men’s health clinic in December so I can write it off in the current year AND not have to worry about it for an ENTIRE YEAR. It is great! Just be sure to follow the 12-month rule…
- Ditto for any other expenses you might have. Often times certain bills like your cell phone, insurance, and reoccurring subscriptions are cheaper if you pay for them in one large lump sum than paying them monthly.
- Ensure you have enough set aside to fund your self-employed IRA or 401k. This can reduce your taxable income by TENS OF THOUSANDS of dollars. If you are employed and do not have a business, be sure you mas out your 401k and traditional IRA before years end to lower your taxable income.
- Been eyeing some new equipment for your practice? Buy it before the end of the year so you can deduct it THIS YEAR.
- Need a new company vehicle? Purchase it now so you can depreciate it before the end of the year.
- Same thing with real estate! If you can find a rental property, then you can depreciate the value of the property this year to offset the cost of the down payment. What does this mean? It means the down payment could end up being tax free! Talk to your accountant about rapid depreciation and how much can be deducted this year. I am buying a property that I will make an AirBNB before years end. I will be able to depreciate the property to completely offset the taxes on the income that will be covering the 20% down payment!
- Thinking about starting a new business in 2022? Then go ahead and get started! You will at least be able to knock out the website or other needed tasks to get it off the ground and deduct them for this year.
- Purchase courses, educational material, or any additional professional materials that apply to your business. We are having a killer Black Friday sale just FYI, so take advantage of that for the tax write off…
These are 8 quick tips to lower your legal tax obligations before years end. The main concept to take away from this is that if your business will need it in 2022, then it certainly needs it now so go ahead and pay for it today and receive the deduction in 2021. As always, talk with your CPA or financial advisor when it comes to legal tax reduction strategies.