How to Lower This Year's Tax Bill: Prepaid Expenses Explained

It’s the end of the year, and while year-round planning is the goal, there’s still a move that can make a real difference right now: prepaid expenses.

In this episode of The Hidden Money Podcast, CPAs Mike Pine and Kevin Schneider explain how cash-basis taxpayers (which includes most individuals and small businesses) can use prepaying certain normal, recurring bills to increase deductions in a high-income year... without creating fake expenses.

They break down the 12-month benefit rule, common examples (rent, insurance, phone, internet, software), the risks of prepaying the wrong vendors, and why this strategy can become a year-end “train” you need to plan your way off. You’ll also hear how prepaid expenses can pair with bunching (doubling up itemized deductions like property taxes and charitable giving) to maximize your tax outcome.

If you’ve ever wondered why people negotiate everything—except their taxes, this episode is your reminder: don’t pay sticker price on your tax bill.

Educational content only; not tax advice. Always consult your own tax professional.