 | Accelerating Deductions/Postponing Income
If you'll be in a lower tax bracket next year, you may
wish to accelerate your deductions into this year and
postpone your income into the following year.
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 or deduction for
qualified higher education expenses)
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Higher tax bracket
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Lower tax bracket
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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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