Up until the end of last week, we were all in the dark as to the fate of the tax world. Were we going to get the extensions for the tax benefits or were they all going away in a cloud of smoke?

Luckily for us, on Friday afternoon the President finally signed the extenders into law. For now, it looks like it is good news all around. The extension brought back a long list of tax deductions, credits, and breaks that were originally expected to expire. Here are some of the more relevant ones for individuals, business owners, and real estate investors:

Tax exclusions for primary home cancellation of debt income
Tax deductions for mortgage insurance premiums
Tax deduction for qualified tuition and related expenses
Low income housing tax credit for newly constructed buildings
Work opportunity tax credit
50% bonus depreciation and Section 179 deductions on new assets used for businesses
Residential energy efficient improvement tax credits
Tax credit for energy efficient new homes and tax deduction for energy efficient commercial buildings

For the comprehensive list of tax changes that were recently signed into law, click here.

In the coming days, I hope to be able to expand more on each of these changes as we head into the 2015 tax filing season. However, in the meantime, let’s focus on some compliance and planning-related items that we can do before the end of the year to reduce our taxes and to minimize our audit exposure.

Set Up a Retirement Account

Keep in mind that you generally have until April 15th of 2015 to fund your retirement accounts for the 2014 year. However, certain types of retirement accounts, such as 401Ks or defined benefit plans, may need to be set up by December 31st of 2014 in order to reduce 2014 taxes. Therefore, make sure that you plan ahead to have these accounts in place before it’s too late. This way, when it comes time to file taxes, you can find out exactly how much of your contribution will be allowed and how much to actually make. This is especially important if you have a 401K account where the amount that you can contribute is based on your business income for that year.

On that same note, if you’re thinking of converting a Traditional IRA to a Roth, now is the time to do it. December 31st is the deadline to make that conversion. One great perk of the Roth conversion option is that if you change your mind, you have all the way until October 15th of 2015 (or the earlier if you file your taxes before then) to change your mind and re-characterize it back to a Traditional IRA.

Related: Your Complete Guide to the Real Estate Professional Tax Loophole

Think about it. This is the IRS giving you a risk-free way to go into the future to see if your investment performs well. For example, if your investment is worth $10k today but worth $50k by next October, then this strategy may have allowed you to lock in $40k of gains tax-free. Now, if the investment value goes down to $5k on the other hand, you may be able to simply “re-characterize” your conversion and change it back to IRA with no taxes or penalties.

Don’t Forget About 1099s

Staying in compliance with the law is important to plan for as we get close to the end of the year. “Do I need to issue 1099s?” is a question that I get asked constantly, so I’d like to lay down the law. If you paid a roofer to fix the roof of your rental property, a plumber throughout the year for bathroom repairs, or pest control to get rid of termites, then you may need to issue a 1099-MISC to each of them if you paid for services over $600.

The only exception is for corporations; they do not require Form 1099s. The deadline to issue these forms is January 31st, so make sure that you have W-9 forms from each and every contractor that you paid over $600 to in 2014. If you don’t already have W-9s from your contractors, this is the time to make sure that you have all of those forms filled out with SSNs or EINs. This way, you can properly issue the 1099s. You don’t want to miss this in case you are audited!

Now, the reality is that there are lots of investors who hire day laborers and do not issue 1099s. What’s the worst that could happen? Well, if audited, the IRS penalty for not issuing the necessary 1099s can be up to 28% of the amount paid, so the question to ask yourself is whether your day laborer is worth the risk of the potential penalty.

Paying Now vs. Paying Later

Right now is a good time to decide whether you should prepay expenses in 2014 or wait until 2015. If your rentals are generating a lot of income this year, then it might be a good idea to renew your insurance early or to prepay for landscaping services or even property taxes. If your rental is underwater this year and you expect it to generate income next year, then you may want to do the opposite and wait until 2015 to spend additional cash.

With the extension of the bonus depreciation and Section 179 deductions, now is the time to consider purchasing any necessary assets used for your real estate business. If you need to buy new appliances for your apartment rentals, consider buying them before year-end to use the bonus depreciation benefits. If you are a flipper and are in need of a brand new work truck, you may get good tax savings this year, especially if the truck is used 100% for business and weighs over 6,000 lbs.

Related: When Are Tax Return Required for Legal Entities? The Answer May Surprise You

If you are planning on selling a property in the near future, …read more