Tax Planning

Good planning happens before the year ends, not when the return is due. I'm Solomon Grosinger, an IRS-licensed Enrolled Agent in Brooklyn since 2017.

I do tax planning and tax preparation for individuals, businesses and trusts, covering the IRS plus New York, New Jersey and Connecticut. We look at your numbers, pick the ideas that actually fit, and put them in place with the right paperwork.

Here are the ideas I review with clients. Not every one fits everyone. Some need the right income level, entity or timing.

Planning ideas for individuals and families

• Harvest investment losses to offset capital gains, and wait 31 days before buying back the same investment so the wash sale rule doesn't wipe out the loss.
• Give appreciated stock to charity instead of cash. You skip the capital gains tax and can still deduct the fair market value if you itemize.
• Open a donor-advised fund to bunch several years of giving into one high-income year, then grant the money out over time.
• If you're 70½ or older, give directly from your IRA with a qualified charitable distribution. It can count toward your required distribution and stays out of your income.
• Use the annual gift exclusion each year for children, grandchildren and others.
• Pay tuition or medical bills directly to the school or provider. Those payments don't count against your gift limits.
• Plan around the federal estate and gift exemption, and remember New York and Connecticut have their own estate taxes with much lower thresholds.
• Consider a grantor retained annuity trust (GRAT) to move future growth on assets to your heirs with little or no gift tax.
• Consider a charitable remainder trust to sell appreciated assets, spread out the gain, take an income stream and leave the rest to charity.
• Look at a long-term (dynasty) trust to hold family wealth for several generations.
• Place investments in the right accounts: tax-inefficient holdings in IRAs and 401(k)s, tax-efficient ones in taxable accounts.
• Run a mid-year and year-end review so income, gains, deductions and Roth conversions land in the best year.

20 tax strategies for small businesses

1. Pick the right entity: LLC, S corp or C corp. The choice sets how the business is taxed.
2. File IRS Form 2553 on time to elect S corporation status (generally by the 15th day of the 3rd month of the tax year it should start).
3. Set reasonable W-2 wages for S corp owners and keep market salary data to back them up.
4. Buy and place in service qualifying equipment, software or vehicles to use Section 179 expensing.
5. Buy eligible property and place it in service to claim bonus depreciation.
6. Track vehicle use with a mileage log or actual-expense records, and confirm the business-use percentage.
7. Check whether you qualify for the QBI deduction: pass-through income, your taxable income and, above the thresholds, the type of business, wages paid and property held.
8. Set up a retirement plan such as a Solo 401(k), SEP IRA, SIMPLE IRA or cash-balance plan.
9. If you're on the cash method, time payments and billing to move deductions into this year or income into next year, within the rules.
10. Create an accountable plan with written reimbursement rules and receipts.
11. Hire family members for real work, and document their duties, hours and reasonable pay.
12. Use part of your home regularly and exclusively for business to qualify for the home-office deduction.
13. Keep records for credits like the R&D credit, the Work Opportunity Tax Credit and energy credits, and file the required forms.
14. Set up health benefits such as an HSA with a high-deductible plan, a QSEHRA or an ICHRA, with proper plan documents.
15. Make the pass-through entity tax (PTET) election in New York, New Jersey or Connecticut where it helps, and pay the entity-level estimates.
16. Rent your home to your business for 14 days or fewer a year (the Augusta Rule), at fair rental value, with an invoice and records.
17. Carry business insurance and pay the premiums through the business.
18. Order a cost segregation study on commercial or rental property you own to speed up depreciation.
19. Deduct up to $5,000 of start-up costs in the first year the business is active and amortize the rest over 15 years.
20. Figure quarterly estimates from this year's actual profit and pay by the IRS and state deadlines.

Trusts and estates

I also prepare trust and estate returns (Form 1041 and the NY, NJ and CT versions) and plan around distributions, the tax year and state residency of the trust.

General info, not advice for your specific case.