Want to lower your tax this year? We'll show you how.
How to lower my tax? See what is still open.
Answer four questions. Then we call about what can change.
Next year's bill can be smaller.
Want to lower your tax this year? We'll show you how.
Answer four questions. Then we call about what can change.
Next year's bill can be smaller.
Most of the tax an owner can save comes from choices made during the year. That includes how your business is taxed, how you pay yourself and how much you put into retirement. Below are 10 ways owners lower their tax, who each one fits and when each one has to be done. If you want to know which ones fit you, Steven Palmieri will go over last year's return with you on a free 30-minute call.
Each of these is legal and common. Each one also has rules about who qualifies and when it has to be done. Here's what each one is and who it usually fits.
A one-owner LLC is taxed like a sole proprietorship unless you choose otherwise. That means all of its profit is subject to self-employment tax. Choosing to have the LLC taxed as an S corporation can lower that tax once your profit is steady. It usually fits owners whose profit is well above a fair salary for their job. An S corporation costs more to run each year, so the savings have to be bigger than the added cost.
An S corporation has to pay you a reasonable salary before it pays you any other money. Social Security and Medicare tax apply to that salary. They don't apply to the profit you take out as a distribution. A salary that's too low can draw questions from the IRS. A salary that's too high gives away the savings. We look at what your work would pay at another company and help you pick a number you can explain.
A SEP IRA lets the business put in up to 25 percent of your pay, up to the IRS dollar limit for the year. If you're self-employed, the amount is figured from your net earnings from self-employment. You can open and fund a SEP as late as the due date of your business return, including an extension. That's why it's one of the few moves that still works after December 31. It fits owners with no employees or only a few, because each eligible employee has to get the same percentage.
A Solo 401(k) is for an owner with no employees, or an owner and a spouse. In 2026 you can put in up to $24,500 of your own pay. If you're 50 or older, you can add $8,000 more. The business can also add its own share on top of yours. The total for 2026 can't go over $72,000, plus any catch-up amount. At the same income, it often lets you put away more than a SEP.
If you have a high-deductible health plan, you can put money into a health savings account. For 2026 the limit is $4,400 for self-only coverage and $8,750 for family coverage. What you put in lowers your taxable income. Money you take out for qualified medical costs isn't taxed. It fits owners who already have a high-deductible plan, or who are willing to switch to one.
Owners of sole proprietorships, partnerships and S corporations may be able to deduct up to 20 percent of their qualified business income. Your S corporation salary doesn't count toward it. Profit kept in a C corporation doesn't count either. Higher incomes and some service businesses face extra limits. We check how your salary and your setup change the size of this deduction.
Equipment, vehicles and software you buy for the business can often be deducted in the year you start using them. Under Section 179, many small businesses can deduct the full cost in that first year. For tax years that began in 2025, the Section 179 limit is $2,500,000. The item has to be bought and in use by December 31 to count for this year. A purchase made only for the deduction still costs you cash, so we check that you need it first.
If you use part of your home regularly and only for your business, you may be able to deduct a home office. The simple method gives you $5 per square foot, up to 300 square feet. That's a deduction of up to $1,500. The regular method uses your actual costs, such as rent, utilities and insurance, and can come out higher. A spare room that's also the guest room usually doesn't qualify.
An accountable plan lets your company pay you back for business costs you paid out of your own pocket. Your home office, your mileage and your cell phone are common examples. The plan has three rules. Each cost has to be for the business. You have to report it, with records, within a reasonable time. You have to return any money you were paid beyond the cost. When the rules are met, the payback isn't wages, and the company deducts it. It helps S corporation owners the most.
If you run a sole proprietorship, or a partnership owned only by a child's parents, you can hire that child. Pay to a child under 18 isn't subject to Social Security and Medicare tax. Pay to a child under 21 isn't subject to federal unemployment tax. The work has to be real, and the pay has to fit the work. These breaks don't apply when a corporation does the hiring.
Not every way on this list fits every owner. The ones that fit you depend on how your business is taxed, how you're paid, what retirement plan you have and what your numbers did this year. On the call, Steven Palmieri goes over last year's return and your current books with you. He tells you which of these you missed and which ones you can still use this year. Other firms sell this kind of plan as a $15,000 project. When you work with us each month, the planning is included. The call is free. Fill this in, and then pick a time. You will be talking to the Steven Palmieri practice.
None of the 10 ways above is a trick or a loophole. Most owners miss them for a simple reason.
Most preparers see your numbers in March or April. By then, most of these choices can't be made for last year. Nothing was hidden from you. It just wasn't anyone's job to look early. Looking early is the point of the 30-minute call.
A cheap preparer may let a number through that your books can't support. That works until the IRS sends a letter, and then you're the one who has to answer it. Book your 30-minute call and find out where you stand.
If the IRS asks about a deduction a year or two later, your books have to show it was real. Books rebuilt once a year from a bank feed and a box of receipts usually can't do that. On the call, you'll hear whether your books would hold up.
Yes. The 10 ways above are the list most owners should start with. Each one has its own rules, and some depend on how your business is taxed. Claiming one you don't qualify for can lead to back tax, interest and penalties later. The free call is where we check which ones fit you.
No one can promise that before reading your return. Be careful with anyone who does. In some years there's real room to lower the bill. In other years, earlier choices already used most of it. Then the work is about next year, and it starts now. You'll hear which case you're in on the call.
It depends on the month and on the item. Big purchases have to be in use by December 31. An S corporation owner's salary is set through payroll during the year. A few retirement deposits can still be made after December 31. Book an earlier time if you can, because more choices are open earlier in the year.
Often, yes. In most cases, the amount taken from your pay for a 401(k) has to be chosen by December 31. An IRA deposit for the year can be made until the April filing deadline. For 2026, the IRA limit is $7,500. A SEP IRA can be opened and funded until your business return is due, including an extension. We'll look at your plan and tell you which date applies to you.
Estimated tax payments are due April 15, June 15, September 15 and January 15. The last payment for 2026 is due January 15, 2027. To avoid a penalty, pay at least 90 percent of this year's tax or 100 percent of last year's tax, whichever is smaller. If your adjusted gross income last year was over $150,000, use 110 percent of last year's tax instead. That cutoff is $75,000 if you're married and file separately. We can work out your amount with you from last year's return.
We start with how the LLC is taxed. A one-owner LLC usually goes on your personal return, unless you chose to have it taxed as a corporation. Your wages and the LLC's profit are reported on separate lines. The tax withheld from your paycheck can cover part of the tax on the LLC's profit. The next step depends on which return the LLC uses.
Steven Palmieri reads your return himself. He doesn't hand it to a seasonal preparer. The practice offers fractional CFO work, monthly bookkeeping and tax filing. We don't do audits or other attestation work. If a lender wants audited statements, we'll tell you that a different kind of firm does that. You can ask Steven anything during the 30 minutes.
Bring last year's business return, and your personal return if you file one separately. Bring whatever access you have to your current books. Read-only access is fine. If you can find the papers from when the business was set up, keep them nearby. If you can't find any of it, book a time anyway and bring what you remember.