Is it adventageous to expedite my wedding before the new year for tax savings?
You are correct. If you get married by December 31, you will file as married for this year (Married Filing Jointly or Married Filing Separately) instead of Single. That could indeed save you some amount of taxes, if your situation is as you described. Some people do plan their date of marriage in such a way to optimize tax savings. Whether your marriage date should be set in such a way is your personal decision. "Yes on taxes. It depends on the other point. As you already see from Ben's comment, if you're both very Western in your culture, you may want to consider Ben's advice because while you will save money, it may not be considered a healthy way to start a relationship.  Western culture tends to see marriage as more of a ""do it for love"" whereas other cultures may view marriage more pragmatically and take economics and finance as a major consideration. For instance, a friend of mine married his spouse and it was 100% pragmatic - considering taxes and laws, driving most of his family insane because ""it doesn't sound very loving"" (these were the exact words).  Unfortunately, this created tension later on because family on both sides kept telling both of them that the other didn't love the partner and they used how their marriage started as proof.  As surprising as it is to me (non-Western), many Americans are horrified at people marrying at the JOP or other pragmatic ways, even if it saves them thousands. Answering questions about relationships is very difficult because often the issue is less about money and more about culture.  If you're both from pragmatic cultures where economics and finance weigh strongly and you don't see possible issues with family (and really be honest on this point), then consider the financial advantages."
You cannot deduct. Even if you could, unless you also hold the mortgage, it's unlikely that you would have sufficient deductions to exceed the standard deduction for a married couple. Not a financially sound decision in my humble opinion. Basically, you are prepaying your taxes and the only reason you want to do that is if you don't have the discipine to save that money for when it is time to pay next year (assuming you will have to). "There is no simple rule like ""you can/can't spend more/less than $X per person."" Instead there is a reasonableness test. There is such a thing as an audit of just your travel and entertainment expenses - I know because I've had one for my Ontario corporation. I've deducted company Christmas parties, and going-away dinners for departing employees, without incident. (You know, I presume, about only deducting half of certain expenses?) If the reason for the entertainment is to acquire or keep either employees or clients, there shouldn't be a problem.  Things are slightly trickier with very small companies. Microsoft can send an entire team to Hawaii, with their families, as a reward at the end of a tough project, and deduct it. You probably can't send yourself as a similar reward. If your party is strictly for your neighbours, personal friends, and close family, with no clients, potential clients, employees, potential employees, suppliers, or potential suppliers in attendance, then no, don't deduct it. If you imagine yourself telling an auditor why you threw the party and why the business funded it, you'll know whether it's ok to do it or not." "Does your company offer a Medical Savings Account? That can allow you to reduce your taxable income. You normally have to join during ""open season"". Another option is Medical and Dental Expenses above 7.5% of your adjusted gross income. This is a high hurdle to meet, and only reduces your taxes by the tax rate x the amount your bills exceed 7.5%" Yes. There are a number of reasons for this, most notably some form of tax credits transfer over from year to year IF you file your taxes, and the CRA will only pay you deductions if all your taxes have been filed. If you don't owe them anything you won't necessarily get in trouble, but don't expect to get any money back from them until you file! Also, while it's probably much too late for this, if you have a partner, you can transfer a certain amount of tax deductions to them, and save them some money. The site is here: http://www.cra-arc.gc.ca/formspubs/t1gnrl/llyrs-eng.html By definition, this is a payroll deduction. There's no mechanism for you to tell the 401(k) administrator that a Jan-15 deposit is to be credited for 2016 instead of 2017. (As is common for IRAs where you do have the 'until tax time' option) If you are paid weekly, semi-monthly, or monthly, 12/31 is a Saturday this year and should leave no ambiguity about the date of your last check.  The only unknown for me if if one is paid bi-weekly, and has a check covering 12/25 - 1/7. Payroll/HR will need to answer whether that check is considered all in 2016, all in 2017 or split between the two. Best consult a CA. There is no clear guideline on this. Some articles do suggest that if engaged and planning to marry, one can transfer money to fiancée without any tax implication. Graduating from college is probably one of the most fulfilling triumphs you’ll ever achieve in your entire life. However, that joy also brings bigger responsibilities in life that could affect tax time too. This specific time in your life will have a lot to offer and before the winds of change take you to wherever you dream of, here are some advices from [Southbourne Tax Group](http://www.thesouthbournegroup.com/) to make your taxes easier where you can get a refund during filing time and save money as well.  If your modified adjusted gross income is below $80,000 and you’re single, up to $2,500 of the interest portion of your student loan payments can be tax deductible, and below $160,000 for married person filing jointly.   Job hunting expenses can be tax deductible too but there are exceptions such as expenses involved in your search for a new job in a new career field and working full-time for the first time. Major tax breaks are expected in case you are moving to a new and different city for your first job.    Get a jump start on retirement savings with your company’s 401(k). Each year, you can secure up to $18,000 from your income taxes by contributing on one. If you have a family coverage, you could secure $6,750 from contributing to a health savings account in case you are enrolled in a high-deductible health plan. And if you are single, you can secure up to $3,400. Placing your money into a flexible spending account could keep an added $2,600 out of your taxable income.    Getting big deductions for business expenses is possible if you are planning to be a freelancer or to be your own boss as a new college graduate. Southbourne Group also advises saving at least 25% of what you’re earning for the IRS.   Research more about lifetime learning credit and understand its importance. You can claim up to $2,000 of a tax credit for post-secondary work at eligible educational institutions. This is possible if your adjusted gross income is below $65,000 as a single filer, or below $131,000 as a married person filing jointly.  Saving money has a lot of benefits and one of which is cutting your tax bill. If you’re a married person filing jointly and have an adjusted gross income of less than $62,000, you may qualify for the saver’s credit, while for a single filer, it should be below $31,000. That can reduce your tax bill by up to 50% of the first $2,000 if you’re a single filer, or $4,000 if you’re a married person filing jointly you contribute to an eligible retirement plan.   Southbourne Tax Group doesn’t want you to overspend on tax software and getting professional help in this regard. The firm suggests using the free packages from trusted tax software companies if your tax situation is quite simple. Get that professional help at Volunteer Income Tax Assistance program, which can help you meet with a pro at little or no cost. "Hearing somewhere is a level or two worse than ""my friend told me.""  You need to do some planning to forecast your full year income and tax bill. In general, you should be filing a quarterly form and tax payment. You'll still reconcile the year with an April filing, but if you are looking to save up to pay a huge bill next year, you are looking at the potential of a penalty for under-withholding.  The instructions and payment coupons are available at the IRS site.  At this point I'm required to offer the following advice - If you are making enough money that this even concerns you, you should consider starting to save for the future. A Solo-401(k) or IRA, or both. Read more on these two accounts and ask separate questions, if you'd like." No, absolutely not.  Income tax rates are marginal.  The tax bracket's higher tax rate only applies to extra dollars over the threshold, not to dollars below it.  The normal income tax does not have any cliffs where one extra dollar of income will cost more than one dollar in extra taxes. Moreover, you are ignoring the personal exemption and standard deduction.  A gross salary of $72,000 is not the same as taxable income of $72,000.  The deduction will generally be $12,200 and the exemptions will be $3,900 for you, your spouse, and any kids.  So married-filing-jointly with the standard deduction will get an automatic $20,000 off of adjusted gross income when counting taxable income.  So the appropriate taxable income is actually going to be more like $52,000. Note that getting your compensation package reshuffled may result in different tax treatment.  But simply taking a smaller salary (rather than taking some compensation as stock options, health insurance, or fringe benefits), is not a money-saving move.  Never do it. Two points You don't really get the full 10,000 annual interest as tax free income.  Well you do, but you would have gotten a substantial amount of that anyway as the standard deduction. ...From the IRS.... Standard deduction The standard deduction for married couples filing a joint return is at $11,900 for 2012. The standard deduction for single individuals and married couples filing separate returns is $5,950 for 2012. The standard deduction for heads of household increases by $50 to $8,700 for 2012. so If you were married it wouldn't even make sense to claim the 10,000 mortgage interest deduction as the standard one is larger. It can make sense to do what you are talking about, but ultimately you have to decide what the effective interest rate on your mortgage is and if you can afford it. For instance.  I might have a 5% mortgage.  If I am in a 20% tax bracket it effectively is a 4% mortgage to me.  Even though I am saving tax money I am still paying effectively 4%.  Ultimately the variables are too complex to generalize any hard and fast rules, but it often times does make sense. (You should also be aware that there has been some talk of eliminating or phasing out the mortgage interest deduction as a way to close the deficit and reduce the debt.) As long as your total doesn't exceed the per-year limit, you should be able to deposit after-tax money into your Health Savings Account. Contact the HSA administrator for details. Note that unless your employer sets this up, you'd be sending them after-tax money, which goes in the same category as other non-reimbursed health expenses, so you may not get any immediate tax savings by doing this vs. just spending the money out of pocket. However, once there us enough reserve money in your HSA for you to invest it in the same way a 401k can be invested, it will grow tax-free. So if you're putting in significantly more than you expect to withdraw any time soon, this may still be a worthwhile thing to do. Definitely talk to HR about whether you can still get it set up pre-tax... though most employers don't allow midyear changes unless there has been a significant change in your family (new wife, new kids, that sort of thing). It sounds like they want to enter you into a contract in which they are allowed to charge a flat fee for filing contingent on money saving results from a tax review service, paid in full. Like those who answered before I have no legal experience.  IRS Circular 230 defines the ethics for tax practitioners and the definition of a tax practitioner is broad enough (effective Aug 2011) to include those who are not EAs, CTRPs, CPAs as long as the person is compensated to prepare or assist in a substantial part of the preparation of a document pertaining to a taxpayer's liability for submission to the IRS. Section 10.27 Fees: (b)(2)A practitioner may charge a contingent  fee for services rendered in connection with the  Service’s examination of, or challenge to — (i) An original tax return Paragraph c defines what a contingent fee is basically a fee that depends on the specific result attained, in this case saving you money. In the section above  'Service's examination'  is an audit in plain speak.  If your 2013 return has not been submitted and you have not received a written notice for examination, H&R block can not charge a contingent fee, period. Furthermore, H&R Block cannot hold your tax documents, upon your request, they must return all original tax documents like W2s and 1099s ( they don't have to return the tax forms an employee prepared). Like I said above, I'm not a lawyer, unless I missed a key detail, I don't believe they were permitted to charge you a filing fee contingent on saving you money. Daniel, first of all, I'm jealous of your predicament.  That said, I think you've gotten some good advice already, so I won't repeat what's been said.  But I will throw out a few ideas that haven't come up.  My first thought is that you may be underestimating upcoming expenses.  It sounds like your current expenses are low, and that's great!  I'm impressed that you're living below your means, and looking for the best way to use your extra cash.  But you may not be thinking of a few things. You have a girlfriend, and maybe your relationship isn't such that you are planning a wedding quite yet.  But, regardless of whether your current girlfriend is your future life partner or not, if you think marriage may be in your future at all, you'll save yourself a lot of stress if you've got some savings for a wedding in place before you're ready to commit. Next, what are you driving?  If it's a good car that you expect to last you another 10 years, you're probably ok right now.  But if you may need to replace your vehicle in the next few years, start saving now and you may be able to buy it outright.  (I expect your interest rate on financing a car would be higher than your current student loan rates, so I would save for a car before paying down loans with such beautiful rates.) A house has already been discussed, and there was also mention of additional education, and both of those require a solid financial plan that begins far in advance. In summary, I think you need a lot more than $5K in savings.  Sure, have some fun, and take advantage of opportunities to travel, etc, as they come along, but if you're able to bump your savings by $500 to $1000/month, I think you'll really be glad you did.  When it comes time for a new car, or you find you're ready to settle down, it will be nice to have somewhere to draw from, and if there's only $5K in your savings, you may come to regret choices you made when you were 22. Not as you suggest. Since you are sole prop, you are taxed on a cash basis. Within reason, you can prepay vendors - so temp to hire through an agency might appear more attractive than direct hire. But there needs to be a justification other than avoidance of taxes. So pre-paying 100k on 12/25 would look fishy as fuck. Plus your quality of candidate will suffer if you need anything other than low skill labor.  Look at your other fully deductible expenses - anything you can prepay-prepay. For example, I set my liability insurance renewal January 15 to provide optionality. But it just shifts one year into another .. Means fuckall if you are in the same marginal bracket next year.  The IRS has also relaxed depreciation on office technology. Computers are now fully deductible rather than being capitalized.  @ 500k revenue you should have a CPA and legal counsel. Simply incorporating isn't tax magic. The purpose is to limit yourersonal liability, not a tax shelter - but shitty things happen once you have employees, don't create the potential for a disgruntled employee lawsuit put your shelter at risk of court judgment.  That said, assuming you aren't dumping a hypothetical on the Internet, congrats - for all the headaches, having employees is the ultimate leverage .. it's like a xerox machine for your labor (including loss of fidelity with each copy) ..