What Are 7 Mid-Year Tax Moves Founders Can Make to Cut Taxes Before Year-End?
Mid-year is the best time to cut taxes. These 7 plays — with why, how, mini-math, documentation, and pitfalls — give founders a time-boxed checklist to finish the year calm and save real money.
Summary of What This Blog Covers
- Fully expanded, time-boxed checklist for year-end tax planning you can start today
- Seven mid-year plays for entrepreneur taxes, each with why, how, mini-math, documentation, and pitfalls
- Where a licensed CPA plugs in so dollars move before December
1. Run Mid-Year Projection & Safe-Harbor Check
Why: Avoid underpayment penalties and surprise April bills. How: Project full-year profit, tax liability, and compare to safe harbor (100%/110% prior-year tax). Mini-math: If projected tax > prior-year × 1.1, increase withholding/estimates now. Pitfall: Ignoring swings in Q3/Q4.
2. Tune Owner Payroll (S Corp Reasonable Compensation)
Why: Too-low salary risks reclassification; too-high wastes FICA savings. How: Review duties/time vs market comp, adjust salary mid-year if needed. Mini-math: $10k salary increase = ~$1.53k FICA but protects distributions. Document memo annually. Pitfall: No documentation.
3. Turn On / Update Accountable Plan Reimbursements
Why: Tax-free reimbursements lower AGI and taxable income. How: Write/update policy, reimburse mileage, home office, supplies with receipts/logs. Mini-math: $5k reimbursed = $5k business deduction, $0 personal tax. Pitfall: No substantiation = disallowed.
4. Time Equipment & Software Purchases (179/Bonus)
Why: Immediate expensing reduces current-year tax. How: Buy qualifying assets by Dec 31, elect Section 179/bonus depreciation. Mini-math: $50k equipment = up to $50k deduction this year. Pitfall: Missing placed-in-service date.
5. Screen & Document R&D Credit Activities
Why: Payroll, supplies, contract research qualify — even small amounts add up. How: Track qualifying time/projects, document uncertainty/resolution. Mini-math: 6–10% credit on qualifying wages. Pitfall: No contemporaneous records.
6. Pick & Fund the Right Retirement Plan
Why: Large deductions reduce AGI and current tax. How: Solo 401(k) for deferral + employer match; SEP for simplicity. Fund by deadline (extensions). Mini-math: $30k contribution = ~$10k tax savings (33% bracket). Pitfall: Missing deferral deadline.
7. Adjust Withholding & State Estimate Calendar
Why: Withholding counts evenly — great for backfilling short quarters. How: Increase W-2 withholding mid-year; set state estimates. Mini-math: $5k extra withholding = $5k credit against tax. Pitfall: Forgetting state deadlines.
Mid-Year Tax Moves Checklist (copy-paste)
☐ Mid-year projection run & safe-harbor compared
☐ Owner payroll reviewed & adjusted
☐ Accountable plan active & reimbursements flowing
☐ Equipment/software purchases planned by Dec 31
☐ R&D activities screened & documented
☐ Retirement plan chosen & funded
☐ Withholding increased & state estimates scheduled
Book a Mid-Year Planning Session
Insogna runs your projection, tunes owner payroll, turns on an accountable plan, times equipment/software, screens R&D credits, and sets your state calendar. We help pick the right retirement plan and adjust withholding so safe-harbor coverage is clear. If you searched “Austin, Texas CPA,” “tax preparation services near me,” or “tax accountant near me,” book a 45-minute Mid-Year Planning Session and finish the year calm.
Frequently Asked Questions
1) When is the best time to run a mid-year projection?
After Q2 books close — gives you Q3/Q4 to adjust withholding, expenses, and contributions.
2) How do I know if my salary is reasonable?
Use market comp data, time logs, duties description, company profit. Document annually with memo.
3) Accountable plan — can I reimburse myself?
Yes — mileage, home office, supplies, travel. Requires policy, receipts/logs, and return of excess.
4) Section 179 vs bonus — which to use?
Use 179 first (up to limit), then bonus on remainder. Both require asset in service by Dec 31.
5) R&D credit — even for small teams?
Yes — wages, supplies, contract research qualify. Keep time logs and project notes showing uncertainty/resolution.
