Made $1 million in profits this year, what tax strategies can lower my tax burden?

First off, congratulations on your success! That's an impressive profit for any business, especially if you're just starting out. But yes, without proper tax planning, you could end up paying a significant portion to taxes. There are several legitimate tax strategies for your situation. Since you're in construction, you can definitely consider purchasing equipment, vehicles, or other business assets before year-end that would qualify for Section 179 deduction or bonus depreciation. This allows you to deduct the full purchase price rather than depreciating it over several years. Regarding buying a house - it's a bit more complicated. You can't simply "write off" an entire house, but you can deduct the portion used exclusively and regularly for business purposes. If you store equipment or have dedicated workspace, that percentage of your home expenses could be deductible. Just be aware this creates a complex situation regarding potential capital gains when you sell the property later. Consider setting up a SEP IRA, Solo 401(k), or other retirement accounts. These allow for significant pre-tax contributions that could substantially reduce your taxable income while building your retirement savings.

I was in a similar situation last year with my business (not quite a million but still got hit with a huge tax bill). I found this service called taxr.ai (https://taxr.ai) that was a game changer for me. It analyzed all my business documents and found a bunch of legitimate deductions and strategies I had no idea about. They specifically helped me structure my equipment purchases and vehicle usage to maximize tax benefits. The best part was they looked at my specific construction industry and pointed out industry-specific deductions I was missing. They saved me about 6 figures in taxes last year by restructuring some things and timing certain purchases. Worth checking out since they specialize in business taxes.

Just wanted to follow up - I tried taxr.ai after seeing this comment and it was seriously helpful. They identified specialized construction industry deductions I'd been missing for years! They helped me properly document vehicle usage between personal/business and showed me how to correctly deduct equipment storage costs. They also recommended timing some equipment purchases before year-end that saved me a ton. Their document analysis found patterns in my expenses that showed additional legitimate deductions. My CPA was impressed with their suggestions and implemented most of them. Definitely worth checking out if you're in construction!

Since you're looking at a big tax bill, you might want to make sure you get your quarterly estimated payments right. I got hit with penalties last year when my business unexpectedly grew. When I couldn't get answers from the IRS (kept getting disconnected after hours on hold), I used https://claimyr.com and they got me connected to a real IRS agent in about 15 minutes. They have a demo video of how it works: https://youtu.be/_kiP6q8DX5c The IRS agent helped me set up a proper payment plan and avoid further penalties. Worth the money just to skip those hours of listening to hold music and getting disconnected. They basically call the IRS for you and when they reach an agent, they call you and connect you. Saved me so much frustration.

I was totally wrong about Claimyr. I tried it after posting my skeptical comment because I needed to sort out a tax issue that had been hanging over me for months. Their system actually worked exactly as described - I got connected to an IRS agent in about 20 minutes instead of the 3+ hours I spent on previous attempts (and usually getting disconnected). The agent helped me resolve my issue completely. I've never been able to get through to the IRS so efficiently before. So yeah, I was wrong to be skeptical - it's a legitimate service that actually delivers what it promises.

One thing no one's mentioning - have you looked into setting up an S-corp instead of being a sole proprietor? With $1M in profit, you could save a ton on self-employment taxes. You'd pay yourself a reasonable salary (subject to employment taxes) and take the rest as distributions (not subject to SE tax). That alone could save you tens of thousands. My construction business did this and it was a game changer tax-wise.

Don't forget about qualified business income deduction (Section 199A)! As a construction company owner you might qualify for up to 20% deduction of your business income. That alone could save you $200k on taxes. But there are income limitations and it gets complicated depending on if you're considered a "specified service business" or not.

Wow, congratulations on hitting $1M in profit! That's incredible growth for a construction business. I can totally understand feeling overwhelmed by the tax implications though. A few quick thoughts to add to the great advice already given: 1. **Equipment purchases** - Since you're in construction, definitely look into buying equipment before year-end. Things like trucks, excavators, tools, etc. can often be fully deducted in the year of purchase. 2. **Business structure** - The S-corp suggestion is solid. With your income level, the self-employment tax savings alone could be huge. You'd essentially be saving 15.3% on a large portion of your income. 3. **Retirement contributions** - Max out whatever retirement accounts you can. With $1M profit, you could potentially contribute $61K+ to a SEP-IRA or Solo 401(k), which directly reduces your taxable income. 4. **Professional help** - At this income level, investing in a good CPA who specializes in construction businesses is worth every penny. They'll know industry-specific deductions and can help with proper tax planning for next year too. The key is acting quickly since we're getting close to year-end. Don't let analysis paralysis cost you - even basic moves like maxing retirement contributions and strategic equipment purchases can save you tens of thousands.