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It’s like a time warp. By the calendar, it’s January 2025, but if your business is on a fiscal year, you may still be in 2024 — at least for tax purposes. So, you may still be able to trim your taxes.

Like the proverbial gift that keeps on giving, a provision of the 2017 Tax Cuts and Jobs Act continues to benefit business owners, according to Benjamin Aspir, a tax partner in EisnerAmper’s Private Client Services Group.

“Bonus depreciation, or an additional first-year depreciation deduction, is an alternative to traditional depreciation,” explained Aspir. “Bonus depreciation is a tax incentive that allows a qualified business to potentially immediately deduct a large percentage of the purchase price of eligible assets, such as machinery, instead of writing them off evenly over their useful life. The TCJA basically doubled the bonus depreciation deduction for qualified property, as defined by the Internal Revenue Service, from 50% to 100%, at least initially. But the bonus write-off decreases each year, and it’s only 60% for the 2024 filing year.”

And there is a deadline for taking this potentially valuable write-off. “Generally, businesses that qualify to elect bonus depreciation must do so by filing IRS Form 4562, ‘Depreciation and Amortization,’” Aspir said. “You must file this by the due date — including extensions — of the federal tax return for the taxable year in which the qualified property is placed in service by the taxpayer.”

So, if it makes sense to take the accelerated write-off, many businesses may still have time to claim it. “But bonus depreciation is scheduled to ‘sunset,’ or disappear at the end of 2026, unless President [Donald] Trump and the incoming Congress extend the rule,” added Aspir.

Some business owners in New Jersey and certain other states may also still have time to escape a tax bite — which was, perhaps paradoxically, introduced by the TCJA — known as the SALT (State and Local Tax) deduction limit.

Before the TCJA was enacted, individual taxpayers could generally deduct SALT expenses — like real property and state/local income taxes — as itemized deductions with few limitations. But for tax years beginning in 2018, TCJA generally imposed a $10,000 cap on SALT deductions.

“New Jersey and many other states, however, enacted legislation that generally gives business owners of pass-through entities a way to bypass the $10,000 SALT limit,” noted Aspir. “New Jersey’s Pass-Through Business Alternative Income Tax Act (BAIT) generally allows such pass-through entities as S corporations and partnerships (including limited liability companies that are treated as partnerships for income tax purposes), to elect to pay state income taxes at the entity level (where deductions for such taxes are generally not limited) instead of at the personal income tax level.”

A pass-through entity generally pays no tax at the entity level – instead, profits and losses are generally passed through to the individual shareholders or owners. Consequently, under the state’s pass-through SALT workaround, with a properly filed BAIT election, “an individual taxpayer, who receives pass-through income from the business can generally then claim a gross income tax credit on his or her personal New Jersey income tax return,” noted Aspir. “The NJ BAIT tax return is due on or before the 15th day of the third month following the close of the entity’s tax year.”

Business owners who are securing their retirement funds with a Solo 401(k) have a kind of grace period, added Aspir. “Generally, a sole proprietor can fund their Solo 401(k) up until the later date of April 15 or the extended due date of their tax return,” he explained. “I have one client who prefers to wait until after year end before they make a determination of how much they’ll put into their plan.”

As companies and their advisers work on their returns, they should remember that “There are a range of tax credits available to businesses,” noted Lynn Mucenski-Keck, lead, Federal Tax Policy at the accounting and advisory services firm Withum. “They include the R&D tax credit (for the design, development or improvement of items like products, processes, techniques or software); the work opportunity tax credit, or WOTC, for employing certain classes of persons, such as veterans; and the 2021 employee retention credit.”

Better late than never

While most tax planning strategies are best implemented before year-end, “some post-year-end opportunities are available,” said Joseph Carnevale, a partner with the advisory, tax and accounting firm Grassi. “Businesses with certain qualified plans, such as SEP IRAs or Solo 401(k)s, can still make tax-deductible contributions for the prior tax year. These contributions can be made up until the tax return deadlines, including extensions. This could allow small businesses to reflect substantial tax-deductible contributions well after the calendar year-end. SEP IRA contributions for 2024 are a maximum of 25% of eligible compensation, up to $69,000 for the year.”

Reviewing fixed asset purchases made during the year is critical to ensuring correct depreciation methods are applied, he added. “While bonus depreciation continues to phase down, eligible assets placed in service in 2024 are still eligible for 60% bonus depreciation. In addition, Section 179 depreciation is still available for certain fixed assets, with a maximum deduction of $1.22 million for 2024.”

Businesses that file accrual-based taxed returns may also be able to reflect additional expenses if the liability was incurred during the 2024 calendar year but not paid out until 2025. “However, these businesses must also account for any receivables as income in the same calendar year, so I would not recommend simply converting from a cash-basis taxpayer to an accrual taxpayer without consulting with your CPA first,” he cautioned. “Finally, there may be a benefit in reviewing your overall entity structure to determine whether the existing entity is still the ‘best fit’ for your business model. While this may not result in tax savings immediately, proper planning — even after the calendar year-end — could result in substantial tax savings for the future.”

The federal tax code gives companies some other opportunities to bend the calendar, noted another expert.

“Businesses can deduct compensation-based accruals to non-owners which are not paid by year-end, provided that actual payments are made within two-and-half months of year-end,” said Neil Gerard, a partner and tax practice leader with the advisory, assurance and tax firm CohnReznick. “Under this rule a business can still deduct the expense on its 2024 tax return provided it meets the following three tests.”

The tests are: a) All events have occurred that established the liability; b) The amount of liability is fixed and determinable; and c) Economic performance has occurred.

He said companies should also consider “other accrued expenses that can be fixed and determinable and where the amount of the liability can accurately be determined, and economic performance has occurred. “

A business can also get a tax deduction for contributing to employees’ retirement accounts, Gerard added. “But you must make the contribution before the date you file your return.”

And Vaibhav Talati, a senior manager at CohnReznick, noted that “President-elect Trump has stated that he plans to allow full expensing of the full R&D costs in the year incurred for U.S.-based expenditures. If this occurs, businesses in the technology and life sciences industries should consider extending their return for 2024 as these changes will enable them to fully deduct their domestic research and development costs.”

But business owners should “carefully review these and other steps and consult with a trusted tax advisor” before taking any action, he added.

The calendar may have closed on 2024, but business owners may still be able to slice off a chunk of the amount they owe to the IRS.