Accelerating Income/Postponing Deductions
If you'll be in a higher tax bracket next year, you may wish to accelerate your income into this year and postpone your deductions into the following year.
Lower Tax Bracket
You can accelerate your
income into this year by:- Collecting any debts you are owed
- Taking distributions from your IRA or
retirement plan if you will not incur an early
withdrawal penalty
- Collecting accounts receivable if you're
self-employed and use the cash method of
accounting
- Arranging to receive dividends
- Settling lawsuits, insurance claims,
etc.
- Selling any assets that would result in a
capital gain
- Redeeming any Series EE savings bonds (also
called Patriot bonds) that you have elected to
defer taxes on until they are redeemed
- Convert a traditional IRA to a Roth IRA
Higher Tax Bracket
You can postpone your
deductions into the following year by:- Postponing charitable gifts
- Paying December's deductible expenses on
January 1
- Delaying the payment of deductible
interest
- Scheduling nonemergency dental and doctor's
visits for the following year
- Delaying the realization of deductible
capital losses
|
 |
sign up for our newsletter
Check our latest published newsletters or read through our archive. If you are interested in accounting updates in your industry, we'd like to have you on our mailing list.
|
