#1 Shift Income/Expenses, Gains/Losses
If 2019 is a great income year, see if you can shift other income (gains from stock sales, business income, etc.) to 2020 and/or accelerate expenses or stock losses into 2019 to take advantage of them faster. A dollar today is worth more than next year. If you aren’t maxing out your 401(k), consider putting more into it before Jan. 1; you could save 20–40% of that amount in taxes. Already maxing out? If your spouse isn’t working, get him or her a part-time job, or pay them as a contractor for your business. They can contribute up to the amount they make into an IRA (up to $6,000 for 2019). Also, consider lumping charitable giving into one year to maximize deductions.
#2 Seek a Second Opinion
Because the statute of limitations on amending returns is three years, we recommend having an outside CPA review your tax return every three years to identify what might be missing. Some CPAs have tunnel vision and only have a few tax planning tricks up their sleeves. (This doesn’t mean they are not good at what they do). Meet with another CPA, pay them for their ideas and then have your CPA amend returns if necessary.
#3 Leverage Family Input
Unlike point one, which shifts tax between years, one of the best and most overlooked tax strategies is moving income to family members. Business owners should be employing their children (documenting what they are doing and when), potentially giving tax-free savings of thousands per year per child. Do you have retired parents with limited income? Consider making them part owners of your business or rental property to move that income to their lower tax bracket. They can always gift cash back to you to make you whole.