The Pivot
Month.
Six months left in 2026. Here’s what can still change your tax bill
July is the pivot. Half the year is behind us, half ahead. Right now — not November, not December — is when the biggest planning moves still have time to work. This issue is for anyone who wants to stop reacting to taxes in April and start designing them in July.
Six Months Left in 2026 — Here’s What Can Still Change Your Tax Bill
By December, most tax strategies are already done. Retirement contributions need payroll runs to clear. S-Corp reasonable compensation needs W-2 filings. Charitable bunching strategies need donor-advised fund setups. Entity changes need state filings. All of that works far better in July than December.
The six levers that still move the needle this month: withholding adjustments, HSA contributions, SEP-IRA / Solo 401(k) setup, LLC to S-Corp conversion, charitable bunching through a donor-advised fund, and tax-loss harvesting. Each can save a Cherry Hill household between $1,400 and $8,500 depending on income.
The honest truth about tax planning: it’s mostly paperwork and timing. There’s no magic. The clients who save the most aren’t using exotic strategies — they’re just running the standard playbook six months early.
Behind on Filing? July Is the Smartest Month to Catch Up
If you didn’t file in April — for 2025 or any year before — July is the best window of the year to get right with the IRS. Here’s why.
Processing times are shorter. The April surge is over, summer staffing is stable, and response cycles at the IRS Service Centers are as fast as they get all year. Returns we file in July tend to be processed in 6–8 weeks, versus 12–16 in February.
Penalties are still cappable. The failure-to-file penalty caps at 25% of the unpaid tax. If you file before September or October, the cap may already be reached — which means nothing further accumulates on the file side. Interest still accrues on the underlying tax, but the file-penalty stops compounding.
First-Time Abatement is cleanest in July. FTA is the IRS policy that will waive one year of failure-to-file or failure-to-pay penalty if you’ve been clean for the prior three years. Requesting FTA during a low-volume month and before additional late years stack up gets the highest approval rate we see.
How to Reduce Your Taxable Income Before It’s Too Late
LLC vs. S-Corp: Why Making the Switch Mid-Year Can Still Pay Off
A single-member LLC files on Schedule C. Every dollar of net profit is hit with 15.3% self-employment tax up to the Social Security wage base, then 2.9% (plus the 0.9% Medicare surcharge for higher earners) beyond it.
An LLC that has filed Form 2553 to be taxed as an S-Corp splits its profit between reasonable W-2 compensation (which carries payroll tax) and distribution (which doesn’t). The distribution side saves the 15.3%/2.9% self-employment tax.
The math on $150,000 net income for a Cherry Hill resident: LLC pays roughly $21,230 in self-employment tax. S-Corp, with a reasonable compensation of $85,000 and distributions of $65,000, pays roughly $12,240. Net savings after payroll admin cost: about $7,500 a year. On $250,000, the savings are closer to $12,000.
The honest tradeoffs: Quarterly payroll, annual 1120-S filing, a second state return in some cases, and — the one that catches people — the S-Corp corporate veil, which has to be maintained with separate banking, bookkeeping, and distributions that aren’t disguised wages. Handled right, it’s the single most profitable structural move a small business owner can make.
Cherry Hill Business Spotlight: What Our Clients Saved in the First Half of 2026
Rather than case-study one client, here’s the first-half pattern across the Cherry Hill small business portfolio we’ve reviewed this year. Names redacted, numbers real
A Haddon Avenue contractor
Entity change from LLC to S-Corp in February, projected annual savings $11,400. A Kings Highway retail owner: updated reasonable compensation and shifted to a Solo 401(k), projected annual savings $8,700. A Cherry Hill IT consultant: home-office recapture, mileage log, and accountable plan, projected annual savings $4,200. A West Cherry Hill medical practice: HRA + HSA coordination plus timing of equipment purchases under Section 179, projected annual savings $22,000.
The common thread
None of this was “aggressive.” Every move was standard tax-code planning applied consistently. If that sounds like what you wanted to do in January and didn’t — July’s a better month anyway.
Want a Real Plan for the Second Half? Sit Down with Us.
This newsletter covers the levers. The Mid-Year Strategic Review is where we pull them — together, on your numbers, with a written plan you can act on before December.
It’s a dedicated session for business owners and rental property investors who’d rather design their 2026 tax outcome than react to it next April.
What’s covered in the session
- Year-to-date revenue & expense review
- Full-year tax liability projection
- Entity structure analysis (LLC, S-Corp, multi-entity)
- Retirement contribution strategy
- Quarterly estimated tax adjustments
- Owner compensation & reasonable salary review
- Asset protection guidance
- Written summary or advisory memo after the session
Three levels — book the one that fits
Sessions run June through August. Limited spots.
Most of our best client relationships started with a mid-year sit-down. This is the structured version of that conversation.
This newsletter is for general informational purposes only and is not a substitute for professional tax, legal, or financial advice. Please consult HofflerSmith Tax Advisory or another qualified professional before acting on anything you read here.