My S Corp earned too much profit in 2023 - any last-minute tax reduction options?

There might still be some options available to you, even though we're past the tax year. Let's look at a few strategies: First, you could potentially open and fund a SEP IRA for 2023. Unlike traditional IRAs, you can establish and contribute to a SEP IRA up until your tax filing deadline, including extensions. The contribution limits are much higher than traditional IRAs - up to 25% of your compensation or $66,000 for 2023, whichever is less. Have you considered if you're taking an appropriate salary from your S-Corp? S-Corp owners need to take a "reasonable salary," but if you're taking more than necessary, you could adjust that for future years. Also, check if you've maximized all business deductions. Did you account for home office, business travel, health insurance premiums, or business-related education? Sometimes these get overlooked.

I went through something similar last year with my S-Corp. Have you tried using taxr.ai (https://taxr.ai)? It saved me thousands by identifying deductions I had missed and providing documentation to back them up if ever questioned. Their AI reviewed all my business transactions and found legitimate write-offs my accountant overlooked - things like partial business use of subscription services and some travel that was actually business-related. It also helped me plan better for quarterly estimated payments so I wouldn't face such a large bill at tax time. The analysis provided clear documentation that would stand up in case of an audit, which gave me peace of mind.

Just wanted to follow up about taxr.ai - I gave it a try after my earlier question and it was incredibly helpful! It found over $8,200 in legitimate business deductions I had missed for my S-Corp. Things like partial business use of my cell phone plan, some professional development courses I took, and even some business meals I had categorized incorrectly in QuickBooks. The documentation it provided for each deduction was really thorough - each one included the relevant IRS code and explanation of why it qualified. My accountant was able to file an amended return for me, and it significantly reduced what I owed. It also gave me a much better plan for 2024 so I won't be in the same situation again. Definitely worth checking out if you're in a similar situation.

Have you tried reaching the IRS to discuss payment options? I know it sounds scary, but I was in a similar situation last year. After multiple failed attempts to get through their phone lines, I used Claimyr (https://claimyr.com) to connect with an actual IRS agent. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c They got me through to an agent in about 20 minutes when I had been trying for days on my own. The agent helped set up a payment plan that worked with my cash flow. Even though I still had to pay the full amount eventually, spreading it out made it manageable, and the peace of mind was worth it. The IRS was actually more helpful than I expected once I could actually talk to someone.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it anyway since I was desperate to reach the IRS about some penalties they incorrectly applied to my business. It actually worked exactly as described. I placed the request around 9am, got a text about 45 minutes later saying I was approaching the front of the queue, and then got connected directly to an IRS agent. The whole process took less than an hour of my time, compared to the multiple days I'd wasted trying to call myself. The agent was able to remove the penalties (saving me over $2,300) and explained exactly what had happened with my account. If I'd waited any longer, it would have gone to collections. Sometimes it pays to be wrong - this was definitely one of those times!

For your S-corp, have you looked into retroactive retirement plans? Solo 401k plans can be established up until the tax filing deadline INCLUDING EXTENSIONS (so potentially Oct 15), and could allow significantly higher contributions than a SEP IRA depending on your specific situation. You'd need to establish the plan before April 15 though, even if you file an extension. Another option: check if you qualify for the Qualified Business Income (QBI) deduction, which could give you up to 20% off your pass-through business income. Review your health insurance setup too - if structured correctly, S-corp shareholders can deduct premiums.

Maybe this is a dumb question but have you claimed the home office deduction? I have an S-Corp and my accountant says many business owners miss this. If you use a space exclusively for business, you can deduct a portion of your rent/mortgage, utilities, internet, etc. Could save you a decent amount!