Accelerating Deductions/Postponing Income
Higher Tax Bracket:
You can accelerate your deductions into this year by:
- Making next year's charitable contributions this year instead
- Prepaying deductible interest
- Paying estimated tax installments in December instead of January
- Accelerating capital losses
- Taking advantage of flexible spending accounts, Archer MSAs, and cafeteria plans
- Making January's alimony payment in December
- Prepaying next spring's college costs in December (if it qualifies you for added Hope/Lifetime Learning credit)
Lower Tax Bracket:
You can postpone your income into the following year by:
- Delaying the collection of any debts that you are owed
- Deferring compensation
- Deferring year-end bonuses
- Delaying the exercise of incentive stock options (ISOs)
- Transferring funds to bank certificates and Treasury bills in order to delay tax on the interest
- Setting up a tax-deferred annuity or retirement account
- Deferring the sale of capital gain property, or taking installment payments rather than a lump-sum payment
- Postponing receipt of distributions that are over the required minimum from retirement accounts
- Increasing your contributions to your company's 401(k) plan or other tax-deferred plans
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