Year-End Tax Tips for Inspectors

by Nick Gromicko, CMI®
Here are some year-end tax tips for inspectors:

  1. Membership in InterNACHI® is tax-deductible, so if you are due to renew your membership in January, February or March of 2024, you might want to renew before December 31, 2023, and take the deduction now.  You can print off your tax-deductible receipt for dues here.
  2. The reverse is true, too. If you do a bunch of inspections between Christmas and New Year’s Day, you might just want to hold the checks and deposit them on January 2, 2024 to defer income into 2024.
  3. Also, if you collect credit card payments at the end of December for inspections you have performed, you may want to wait until New Year’s Day to process the batch, as they aren’t considered income until the year the payments are actually deposited into your checking account.
  4. The reverse is not true about checks you write.  A check written for a business expense and put in the mail in December 2023 can be deducted in 2023, even though the check doesn’t clear until 2024. New Year’s Eve falls on a Sunday this year, a day the U.S. Postal Service and banks aren't in operation.  The Postal Service and banks aren't in operation the following day (New Year's Day) either. Therefore, any check for business expenses written on New Year’s Eve is deductible in 2023, even though it won't come out of your bank account or even get mailed until 2024.
  5. Putting a business expense on your credit card in the month of December 2023 is deductible in the 2023 tax year, even though you don’t pay on your credit card until 2024. So use your InterNACHI discount to do some shopping at Inspector Outlet.
  6. If you apply and pay for your Certified Master Inspector® (CMI®) professional designation before December 31st, you will be a CMI® for life, even though you are deducting the entire fee this year.
  7. You can join the Certified Commercial Property Inspectors Association® (CCPIA) before December 31st, 2023, you will be a member for all of 2024 even though you are deducting your membership dues this year.
  8. In the past, many inspectors who ran their businesses from home have been reluctant to take a home office deduction for fear of triggering a red flag with the IRS.  This year, because of COVID-19 and because of the trend of more Americans working from home, the IRS isn't likely to scrutinize home office deductions.  So take your full deduction for running your inspection business from home.
  9. Because InterNACHI is a U.S. Department of Education-accredited school, you may be eligible for education credits.  There are two credits available:  The American opportunity tax credit (AOTC) and the lifetime learning credit (LLC).  Ask your accountant about them.
  10. You can sell investments such as stocks and mutual funds to offset any taxable gains.  Losses offset gains dollar for dollar.  And if your losses are more than your gains, you can use up to $3,000 of excess loss to wipe out income from your inspection business.
  11. The same is true for crypto. You can use losses in crypto to offset other gains, dollar for dollar.  And FTX losses are from theft and so they are fully deductible without being cutoff by the $3,000 cap.
  12. If you bought a new plug-in electric vehicle or fuel cell vehicle in 2023 you may qualify for a clean vehicle tax credit of up to $7,500.  Ask your accountant about it.
  13. Take the energy-efficient home improvement credit if you installed new doors, windows, skylights, insulation or heat pump that more efficiently regulate the temperature of your home.  Ask your accountant about this credit.
  14. Do you qualify for the kitchen update credit? The Inflation Reduction Act provides for a rebate of up to $840 if you switched from gas to an electric stove, cooktop, range, or oven.  
  15. And finally, Cozy Coats for Kids® is an award-winning registered charity. Give your inspection company's website an SEO bump by making a tax-deductible donation.  Cozy Coats for Kids® will then list your inspection company's contact information on their Donors Page forever. Scroll down that page to view other inspectors who have donated. Because donations to Cozy Coats for Kids are an advertising expense, donations are 100% deductible business expenses, not limited to a percent of your adjusted gross income.