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Title: 7 year-end CPA tips to save on your taxes

16th November 2020 Print

Year’s end is a good time for a CPA to help clients reduce their tax bills or enjoy a bigger refund check for next year. Below are some helpful tips CPAs can share with their clients to make their April 15 a less stressful experience. 


CPAs should remind their clients to gather and organize their tax data as soon as they can. They should look at all receipts and canceled checks and round them up, including those from non-profits and charities. Also, check their newest brokerage statements for gains or losses for the year, and create a checklist of accounts to manage the 1099s, if there are any. Also, insurance reimbursement forms and medical receipts should be organized. 

It is simpler to have the originals or obtain replacements where there is plenty of time instead of finding out on April 14 that they are missing vital documentation. 

The Alternative Minimum Tax

As you devise a year-end plan for your clients, make sure you assess if they are exposed to the Alternative Minimum Tax (AMT). Taxpayers who may be affected by this tax have additional items to think about when lowering their tax bill. 

The AMT reduces or eliminates federal tax savings of many of the best tax planning techniques. The decision to accelerate an expense or defer some income to lower income for regular tax reasons may not always save the client federal taxes because it can subject them to the AMT. 

Make a Tax Projection

Before the year’s end, CPAs should make a tax projection for each client based on their known income and deductions for that year. By putting everything in one spot, you may pinpoint planning opportunities, and many of them need to be completed before the end of the tax year. 

For example, it can make sense to prepay state income tax during the year to get a federal tax deduction for the current year. 

Go Over Income and Deductions

The best tax saver for the year is to adjust the timing of the client’s deductions and income. If you think income tax rates will increase next year, it may help your client take income the year before and defer deductions to the next year to save income taxes and keep deductions to save on taxes the next year when rates will be higher. 

Delay Income

If your client gets a bonus, they might want to see if their company will wait to write the check until January. If they operate a cash-based company, they can time the income by waiting until the year’s end to send December billings to their customers and clients. Note that taxpayers cannot defer taxes by not depositing a check in the bank. 

Fund Retirement

Your clients should consider converting their traditional IRA to a Roth IRA. The money in a Roth IRA grows free of taxes, and Roth IRA distributions are not usually taxable after a five-year holding time. This means that people who do not need the IRA to live on can pass on more money to their families, and the money will grow - tax-free. 

Pay Deductible Taxes Before the End of the YearTell clients to pay their state income tax estimate before the end of the year because it accelerates the federal deduction. They can also pay their property taxes early, make an extra mortgage payment, and pay you for your tax planning services. 

The Bottom Line

CPAs can offer their clients valuable advice to save on their taxes every day of the year, but mostly as tax time approaches. CPAs have an in-depth education in tax laws and regulations, must study years to become CPAs, and take a strict CPA examination to practice in their profession. Clients should feel confident relying on their CPAs for the best tax advice.