You don't worry about your safety CoffeeAndDonuts w.r.t. your tax avoidance? In Canada, the CRA is making a big push to target tax avoiders. I'm unaware if the IRS in the USA has similar authority.
GrantMeAName did a good job clarifying tax evasion vs. tax avoidance.
I am not at all concerned. I'm a stickler about record keeping and doing things right.
Worst case, I get caught with some technical mistake. Without any egregious efforts and intent, any penalty levied by the IRS should be pretty minimal over the tax liability itself. I've been through business audits before and came out squeaky clean.
Lastly, I'm not doing anything terribly unique... just doing a lot of it!
* Retirement accounts are very normal. Ours just has a higher potential because of my wife's individual 401k (aka solo 401k)
* Donating to charity is very normal. We just took advantage of the opportunity to fund years of giving at once given 2018 tax changes and the coincidence with a historically very high income year for us. Also, charity in the US doesn't get limited by the AMT (which is the means by which the govt tries to make sure you don't avoid TOO much tax).
* We prepaid property taxes on both homes (selling one at the moment). Totally normal deduction, just accelerated. And our bills both presented as "due" so we expect no issue here.
* Overpayments to state taxes weren't extreme by any means. Probably 20% overpaid and well within reasonable standard given our unpredictable business incomes.
* Business moves were straight forward (e.g. decided whether to write off certain receivables, paying some marketing expenses early, a few employee bonuses accelerated).
All our strategies are basically timing shifts where we executed activities earlier than we might have otherwise since we were in a high tax year. That was compounded by the 2018 tax changes making some of the strategies less effective or moot but all are long established.
When you have relatively variable income, it becomes even more worthwhile to be positioned well for both low and high tax year strategies and to know the tools well. In November of each year, I go into tax planning mode.
If we do have another high income year in 2018, we will have substantially fewer tax avoidance/minimization strategies to deploy!
