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The Basics on Safe Harbor Rules

Audio version available here:

Length: approx. 1 min. 10 sec.

Welcome to the XQ CPA Tax Day Checklist, a series sharing tax tips every day leading up to the April 15th tax filing deadline. Today, we will be discussing safe harbor rules and how they can instantly reduce your tax burden.

Safe harbor rules kick in when certain conditions are met. You can execute this strategy by determining possible expenses you will incur in the first few months of the next year for your business. Prepay these expenses before December 31st. By doing so, you can claim the deduction now instead of waiting for the next year. Examples of expenses you could claim include, but are not limited to, rent, utilities, office supplies, and business travel.

There are two ways to best utilize this strategy. One way is to charge business expenses to your business credit card. This will provide substantiation for all transactions incurred. The second way is to write a check to the vendor or contractor and ensure that the check is dated before the end of the year.

Want more tax tips? XQ CPA has all the latest and greatest tax tips and business news for 2023 tax filing. Tune in tomorrow to learn about the deductions on business supplies & materials.

Phone: 832-295-3353

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