Plan to Best Defer or Acceleration

Defer/Accelerate Income

 

Most small businesses utilize cash basis of accounting for their taxes, may defer their current billing and collection efforts to future year, if they believe to have less income or predict the tax rates will be lower next year, and their conduct doesn’t violate any laws. Conversely, if they believe they will have more income next year or they will be in higher tax bracket next year, they may accelerate their billing and increase their current year income. 

Accelerate/Defer Expenses

Taxpayers who believe they will be in a higher tax bracket next year, they may defer current deductions into the future year. Conversely, they may accelerate their business deductions, medical expenses, 4th quarter State estimated taxes, property taxes, etc., after consulting their advisor to avoid any AMT trap, and their conduct is not illegal.

Tax Tip: If you believe the incoming Trump Administration will cut the tax rates, you may defer your income to the new year. For employees and executives, this means deferring current year bonuses to future year.
Tax Tip: If you believe the incoming Trump Administration will cut the tax rates, you may accelerate current expenses.

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