This article explains how to get the IRS to owe you money.
Of course, the IRS likely won’t cut you a check for this money—though, under the right circumstances, it will. But in most cases, you’ll realize the cash by paying less in taxes.
This article gives you six powerful business tax deduction strategies you can understand and implement before the end of 2026.
1. Prepay Expenses Using the IRS Safe Harbor
Thank the IRS for its tax deduction safe harbors.
IRS regulations include a safe-harbor rule that lets cash-basis taxpayers prepay and deduct qualifying expenses up to 12 months in advance without IRS challenge, adjustment, or change.1
Under this safe harbor, your 2026 prepayments cannot go into 2028. This makes sense because you can prepay only 12 months of qualifying expenses under the safe-harbor rule.
For a cash-basis taxpayer, qualifying expenses include lease payments on business vehicles, rent payments on offices and machinery, and business and malpractice insurance premiums.
Example. You pay $3,000 a month in rent and would like a $36,000 deduction this year. So on Thursday, December 31, 2026, you mail a $36,000 rent check to cover all your 2027 rent. Your landlord doesn’t receive the payment until Monday, January 4, 2027. Here are the results:
- You deduct $36,000 in 2026 (the year you paid the money).
- The landlord reports $36,000 as rental income in 2027 (the year he received the money).
You get what you want: the deduction this year.
The landlord gets what he wants—and likely more: next year’s entire rent in advance, eliminating collection problems while keeping the rent taxable in the year he expects it to be taxable.
Get the timing right. If the landlord uses cash-basis accounting and receives $36,000 of 2027 rent paid in advance in 2026, he would have to pay taxes on that rent in 2026.
Don’t surprise your landlord. Before sending a big rent check, make sure your landlord understands the strategy. Otherwise, he might not deposit the rent check (thinking your payment was a mistake) and instead return the check to you. This could crimp the strategy because you operate on a cash basis.
Also, think proof. Remember, the burden of proof is on you. How do you prove that you mailed the check on December 31? (Think like an IRS examiner or, better yet, a prosecuting attorney.)
Here’s the answer: send the check via U.S. Postal Service (USPS) tracking, such as Priority Mail with tracking and, if possible, signature required. Or even better, use one of the old standards the IRS honors, such as certified or registered mail.
With these types of mailings, you have proof of the date you mailed the rent check. You also have evidence of the date the landlord received the check.
If you use USPS online tracking, print the delivery and receipt tracking results for your tax records, because that tracking information disappears from the postal service records long before you would need it for the IRS.
One little-known rule. Here’s an obscure rule: under the tax rules, you don’t (and shouldn’t) include the December 31 rent payment on the Form 1099 you give the landlord. This surprises many, but reporting the December 31 payment on the 1099 to the landlord would be incorrect. To see how to get the 1099 right for you, the landlord, and the IRS, see Avoid IRS Audits: Fix the 1099 Prepaid Rent Mismatch.
A second little-known rule. If you and your corporation operate on a cash basis and your corporation pays rent to you, you can use this strategy to create a deduction for your corporation this year. In other words, the related party rules do not apply. For details, see Surprise: Related Party Rules Do Not Kill Prepaid Rent Strategy.
2. Stop Billing Customers, Clients, and Patients
Here is one rock-solid, time-tested, easy strategy to reduce your taxable income for this year: stop billing your customers, clients, and patients until after December 31, 2026. (We assume here that you or your corporation operates on a cash basis and uses the calendar year.)
Customers, clients, patients, and insurance companies generally don’t pay until billed. Not billing customers and patients is a time-tested tax-planning strategy that business owners have used successfully for years.
Example. Jake, a dentist, usually bills his patients and the insurance companies at the end of each week. This year, however, he sends no bills in December. Instead, he gathers up those bills and mails them the first week of January. Presto! He just postponed paying taxes on his December 2026 income by moving that income to 2027.
3. Buy Office Equipment
Qualifying Section 179 and bonus depreciation purchases include new and used personal property such as machinery, equipment, computers, desks, furniture, and chairs (and certain qualifying vehicles).
You can likely use either 100 percent bonus depreciation or Section 179 expensing to deduct 100 percent of the cost of machinery, equipment, computers, desks, furniture, and chairs.2
Thanks to the One Big Beautiful Bill Act, 100 percent bonus depreciation is now permanent for qualifying property you acquire and place in service after January 19, 2025. And for tax years beginning in 2026, the Section 179 expensing limit is $2,560,000, with the dollar-for-dollar phaseout beginning when you place more than $4,090,000 of Section 179 property in service during the year.3
Planning note. If you qualify for the Section 199A deduction, the increased expenses will reduce your Section 199A deduction, as explained in 2026 Last-Minute Section 199A Tax Reduction Strategies.
4. Use Your Credit Cards Correctly
If you are a single-member LLC or sole proprietor filing Schedule C for your business, the day you charge a purchase to your business or personal credit card is the day you deduct the expense.4 As a Schedule C taxpayer, consider using your credit cards for last-minute purchases of office supplies and other business necessities.
If you operate your business as a corporation and the corporation has a credit card in the corporate name, the same rule applies: the date of charge is the date of deduction for the corporation.5
If you operate through a corporation but use a personally owned credit card, the corporation can claim the deduction only after reimbursing you. Submit your expense report and obtain reimbursement by midnight on December 31.
5. Don’t Assume You Are Taking Too Many Deductions
Never stop documenting your deductions, and always claim every deduction you’re entitled to. We have spoken with far too many business owners, especially new owners, who don’t claim all their deductions when those deductions would have produced a tax loss.
But this won’t happen to you. Why? Because as a member, you know every deduction matters. And you know you must claim all your deductions to keep your taxes at the right amount.
If your business deductions exceed your business income, you have a tax loss for the year. With a few modifications, tax law calls this a “net operating loss,” or NOL.6
The good news is that NOLs can become future cash infusions for your business because you can carry forward 2026 NOLs to future years.
6. Deal with Your Qualified Improvement Property
Qualified improvement property (QIP) is any improvement made by you to the interior portion of a building you own that is non-residential real property (think office buildings, retail stores, and shopping centers) if you place the improvement in service after the date the building was first placed in service.7
The big deal with QIP is that it’s not considered real property that you depreciate over 39 years. QIP is 15-year property, eligible for
- immediate deduction using Section 179 expensing,
- 100 percent bonus depreciation, and
- MACRS depreciation.
To get the QIP deduction in 2026, you need to place the QIP in service on or before December 31, 2026.
Takeaways
When it comes to your taxes, business deductions are king. The more business deductions you can claim, the better. The more business deductions you claim, the less you pay in regular taxes. And if you are self-employed, you’ll pay less in self-employment taxes.
Yes, paying less in taxes is good.
Here is a review of the six last-minute tax deduction strategies covered in this article:
- Prepaying your 2026 expenses right now reduces your taxes this year. While it’s true you kicked the can down the road, perhaps you have an offset with a big deduction planned for next year. Even if you don’t have a plan now, you still have plenty of time to create big deductions for 2027.
- The easiest year-end strategy of all is to stop billing your customers, clients, and patients. Again, this kicks the can down the road and makes your 2027 tax planning more important.
- You can make significant equipment, machinery, and furniture purchases and write off 100 percent of the cost using either bonus depreciation or Section 179 expensing. To claim the deduction this year, place the assets in service on or before December 31, 2026.
- Charges to your credit cards can create deductions on the day of the charge. This is true if you are a sole proprietor or if you operate as a corporation and the credit card is in the corporation’s name. But if you operate as a corporation and the credit card is in your personal name, your corporation must reimburse you by December 31, 2026, to create the 2026 deduction at the corporate level.
- Make sure to claim all your legitimate deductions. Don’t think you have too many, and don’t try to avoid deductions that you think could be red flags.
- First, it’s unlikely you could have enough deductions to create red create red flags.
- Second, no one knows what those red flags are.
- Third, if the deduction is legitimate, it doesn’t matter if the IRS audits it—you’ll win.
- If your deductions exceed your income, you will have a loss for the year, and that loss can create an NOL. The good news here is that the NOL can give your business a cash infusion beginning with next year’s tax return.
For your 2026 QIP deduction, make sure to place the QIP in service on or before December 31, 2026.
Client Letter on This Article for Your Use. Click Here.